Gailthin has learned that a group of dwarves has established an encampment in the low-lands of Ered Luin, north of Gondamon.
'I will see if I can learn anything from the dwarves here. Mathi Stouthand is the Lord of Gondamon, and he has spoken openly to me in the past. I will judge his conversation to see if he is hiding something.
'Do not betray what we have learned to anyone but an Elf. The dwarves will surely raise their guard if they gain any suspicion of what we know. This I do know: there is an encampment of strange dwarves to the north of Gondamon. You should go there and seek out Aglarchen, he went in search of Avorthal there and has yet to return.
'Find Aglarchen there, learn if the dwarves of the low lands, at least, have turned against us. Be cautious for the dwarves may be hostile.'
The suspicious encampment is in the low-lands of Ered Luin, north of Gondamon.
While Gailthin tries to learn the truth of Avorthal's whereabouts from Mathi Stouthand, the Lord of Gondamon, she has asked you to investigate a suspicious encampment of dwarves.
Gailthin is in Gondamon, south of the suspicious dwarf-encampment.
While investigating the dwarf encampment, you found Aglarchen, a friend of Avorthal, who revealed where Avorthal is being held. You should return to Gailthin with this news at once.