'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 learn if they know anything of Avorthal or his whereabouts.
If you find Avorthal there, then the dwarves of low-lands, at least, have turned against us. I would take allies, for the dwarves maybe hostile.'
Gailthin has learned that a group of dwarves have established an encampment in the low-lands of Ered Luin, north of Gondamon.
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. She recommended you take allies with you.
While investigating the dwarf encampment, you stumbled across Aglarchen, a friend of Avorthal, who revealed where Avorthal is being held. You should return to Gailthin with this news at once.
Gailthin is in Gondamon, south of the suspicious dwarf-encampment.
Talk to Gailthin
Aglarchen can be found at 17.6s 96.0w