After you have given the remaining Focus Stones to Saturas, and spoken to him about what they need to do next, Saturas will mention needing the original twelve mages (now split into six Mages of Fire and six Mages of Water) to blowthe ore mound, but hesitate to mention more. He'll tell you to go to find some way to contact Corristo, leader of the Mages of Fire, and attempt to appeal the New Camp's proposition and present you with a teleport rune to give to Corristo, as a sign of Saturas's trust. If you go down to Cronos, by this point, you can begin the equally ill-fated subquest where you seek the aid of the Magicians of Fire. All in all, you'd probably need the necklace that couriers like Mordrag use to talk to the Magicians of Fire, so this can actually assume to just be another part of this quest, even though it will end long before the entry for being Banished from the Old Camp vanishes.
When you head to the Old Camp to deliver the message to the Mages of the Circle of Fire you'll see a strange sight: both gates are shut and heavily guarded. If you approach they'll say you can't come in, and, if you were a member of the Old Camp (regardless of whether you were a Guard or a Magician of Fire) they denounce you as a traitor and chase after you.
It isn't too difficult to outrun them. Go around to the rear gate until you see Diego. He explains the situation: the Old Mine collapsed when water got in. Gomez, desperate to maintain the constant supply of ore to the outside world that is crucial to his easygoing life, decided to launch an attack on the Free Mine and seized it, killing everyone there. When the Magicians of Fire opposed this plan they were executed.
Diego wants you to track down three others to have what he calls "the meeting", which takes place in an undisclosed location. This quest is optional, so it doesn't matter if you can't find all three.
All you can do is head back to the Magicians of Water and tell them the bad news. They'll let you join their camp (if you were a Guard, join the Mercenaries. If you were a Magician of Fire, join the Magicians of Water). With no other choice available, Saturas will send you to find Xardas the Necromancer.