Jendri leads Gemwin, Grom, and Vindalf (Hokan is missing) to go talk to the Ironvein Duergar and explore a deeper level. Jendri offers Nimira and the other duergar some of the treasure they've gained, and they get a tour of the kitchens and the forge, which has a stream running into a deep chasm. Several of the duergar agree to hire on with the dwarves when they come back with a caravan in a few months, including the smith Snurriven and the alchemist Vorla. The party explores the chasm, first stopping on a ledge on the far side from the forge, where they discover a chimney with a rope and an escape bag. Delving into the chasm, they have a couple of close calls with Grom on the chain ladder. At the bottom, they discover another portion of the underground river, that leads to a dark lake with vines and algae. There they are suddenly attacked by a green dragon, who rises to breath poison on them before disappearing underwater again. They flee, but it breathes on them a few more times before they ascend the chasm to escape. Back up on the forge level, they recover, strategize, and offer a share of treasure to some of the duergar to help fight the dragon in its watery lair. Snurriven accidentally ruins Grom's new armor trying to repair it, and the party finds many situations in which Hokan would have been helpful.