Go to the inn and talk. Basconar will introduce himself and offer you a quest. You, being obviously the intrepid type, will accept. (Don't worry about refusing if you've forgotten anything - he'll still be there.) As usual, leave Shanoah and head for your destination - this time it's Mount Drake.
Head left across the parched rock. Follow the ominous shadow, and enter the mine. Follow the tunnel. Take the little detour and search the sack, then continue south and emerge blinking into the daylight again. Follow the ledge; you don't need to wait long to learn more about that shadow.
After the fight, head down the ladder and go east, where you'll find that save point you saw earlier and a large hole. Climb down into it; you won't get far, but you need to do so anyway. To the left of the pit is a pile of rocks, which you also want to examine. Now head back up that ladder and enter the mine over at the far left. The map-room you saw earlier is off to the right. Go and search the bag in there to find a rock with strange characters carved into it. Take it, then grab the pickaxe. That's all there is here, so backtrack to the entrance to this part of the cave. Nip outside and break the pickaxe on the pile of rocks, then return and take the northwest passage. Near the top of this screen there's a dead-end passage to your left, and beyond it a small room apparently blocked in. If you search the north wall of the dead-end you can open a secret door into that room; there's a skeleton inside which you can examine (you'll find, but leave, an eyepatch). You'll be coming back later, but that's all for now. In the same area, south of this small room, there's another pick lying on the floor; you want to grab it.
Head north again. There's a save point. If you check the sacks in this room you may find a Red Crystal. Head into the next room, where lurk a woman and another of those Gargbat things, which you must kill.
Now examine the bag below the table for a rope ladder, read the letter on the table if you want, examine the shovel up north, then head back outside and down the first ladder. Try the rocks again with your second pick, and you'll find some more crystals. Climb down into the hole, using your ladder to extend the existing one when you need to. Head east, then follow the chibi which appears and head north.
There'll be a short conversation. After it, go to the small patch of mushrooms to the west and eat one to raise your lead character's intelligence. If you repeat the act, it'll have no effect, and then the third time you'll be poisoned, so don't be greedy. Then continue to the north.
You'll find Vitus, Basconar's missing friend. If you leave after the speech he initiates, you can end the scenario for a smaller reward, but as usual it's worth staying the course. Chat with him for a while, then talk twice to the chibi that's looking at rocks to his left: he'll decipher the stone you found earlier for you. When you go back south, there's another Gargbat to fight. Keep going, and you'll run into an old friend.
She's less than delighted at this reunion, however, and will summon yet more Gargbats for you to play with. This time you'll fight three at once. It gets worse; once you defeat these, she'll summon a Heat Garg. This beastie can cast Flare Storm three times, which might give you rather a headache, so keep your HP up. Icefall is very effective, as you might guess.
This next part is optional, and you'll need the Jump skill for it, so skip ahead if you don't have that. After the confrontation, return to the eyepatched skeleton. Examine it again, and the rock under its head, then go north to collect the shovel. Now, the question remains where to dig. You can try the rock by the skeleton, but there's nothing under it. Instead, go back to the map room. If you look at the map (with your eyes, that is - examining it has no effect), it's actually a map of those islands you can jump between down at the bottom of the mine. If you head down there, and try digging at the spot that's circled on the map (it's the middle one of the three largest stones on the largest island), you'll find a Damascus Sword.
Now all that remains is to talk to Vitus some more and then leave. Antoniana will drop by as you approach the exit. When you get back to Shanoah, go back to the inn and talk to Basconar. If you want to know more about Nealertos, he'll give you another opinion, but whatever you reply, you've completed the scenario.