So, ich hoffe, das hilft Dir aus der Stadt

Here, you will find, instead of the blacksmith, his apprentice. He explains
about the blacksmith's death, and will tell you what you must do to lower the
drawbridge (your ultimate goal). You will gain the blacksmith memo, which
tells you how to use Oni dust, and you will receive some Oni dust from the
apprentice. Now, you must find the ironstone so that the apprentice can forge
a gear for the bridge mechanism.

To continue, simply throw the Oni dust into the nearby fireplace, and a portal
will appear. Step in to warp to the Sea Temple.