The rescue party, having defeated Klarg in the upper chamber, returned with the head of the bugbear leader to the makeshift dining hall where Yeemik held Sildar prisoner. Yeemik saw this as an opportunity to exercise his new self-appointed status as king of the cavern and demanded that a sum of 50 gold coins be paid for Sildar's release.
This did not please our fledgling group of adventurers. After a brief huddle, Meltune used a spell to make John's sword appear to spark and crack with electricity pulsing around the blade (though in truth this was a mere parlor trick). John held the "magic" sword above his head and loudly proclaimed that the other goblins should not listen to Yeemik, for he is a weak king, but instead should follow him as their new leader. This actually seemed to cause a stir in the goblins, who seemed to be considering John's offer.
This diplomatic victory was short-lived, as Wicey immediately shot one of the goblins in the face, killing it instantly. Zalanar, assuming it was time to fight, followed up with a blast to another goblin's face. So much for that plan, the goblins raised their weapons and attacked! Yeemik angered by this, shoved Sildar off the upper level, rending him unconscious and slowly bleeding out.
It was a fierce close-quarters battle, John was defeated early (the stray arrow from Sylvan wasn't much help), but was rescued from the grips of death by Meltune (who also managed to stabilize Sildar); but the goblins were slain and Yeemik was killed by Sylvan.
After mending their own wounds and Wicey forcing a potion of healing down John's throat, they picked up any valuables they could find. Certain that they had searched every inch of the cave without sign of Gundren, they left the cave (Sildar was still unconscious and was carried by Meltune).
Exiting the cave, they found the goblin that was tied up outside had awoken and was trying it's best to escape. The adventurers surrounded the goblin and untied it, then proceeded to tell it that it was the new goblin king of Cragmaw Caverns. The confused goblin (named Lart, though Wicey and John insisted on calling him Gart) ran away into the cave, having been frightened, confused, and outnumbered.
Once back at the cart (which remained safe during their foray in the caverns), Sildar awoke and thanked the adventurers for the rescue. He was sad to report that Gundren had been taken to a place called "Cragmaw Castle" and added that they also took his map to the lost Wave Echo Caves. Not wanting to pressure the injured man, the party allowed him to sleep in the cart until they made it to the town of Phandalin.
On the road, they discussed Phandalin and Wave Echo Cave. Wicey, having lived there a number of years explained the history of the town:
"Centuries ago, the mining town of Phandalin was established by humans. They had found an enormous cave full of platinum veins, they say that you can hear the sound of waves somewhere deep in the cavern, thus it was dubbed 'Wave Echo Cave'. There was a problem though, the cave was also utilized by gnomes and dwarves. The humans made a pact with the gnomes and the dwarves, so that all could utilize the cave in peace. This was called the 'Phandelver Pact'.
Decades passed and as the town of Phandalin had grown in size and was becoming a city in its own right, a hoard of orcs raised the entire region, leveling the town and driving out the inhabitants of the Wave Echo Cave and by doing so, the location of the cave was lost.
The town was nothing but ruins until about 20 years ago, settlers from Neverwinter and Waterdeep came together to resettle the town atop the ruins. Now the town is inhabited by miners who mine the rivers and fields surrounding Phandalin for ores and minerals."
Not long after Wicey's tale, they rounded the bend in the road and entered Phandalin. Sildar got a room at the Stonehill Inn and asked the group to find him the next day at the Townmaster's Hall (where they would be paid for helping him). The group took the wagon to Barthen's Provisions, as instructed.
On the way in to Barthen's Provisions, they met a couple of ruffians in red cloaks. They were obviously hostile, but after exchanging a few words, the ruffians decided to move on, but leaving a threat "you betta' watch yer backs." Afterwards, the group dropped off the cargo, cart and all, and retired to the Stonehill Inn after receiving payment.
Later, at the Stonehill Inn, John buys a round for everyone in the common room. The group learns that a group of ruffians fitting the description of the two they saw at Barthen's Provisions, called the Redbrands, were extorting the town for money and causing general ruckus. They even murdered a shopkeeper in broad daylight for talking back to them after they insulted his wife (and they supposedly kidnapped his wife and child).
Wicey admitted that she used to be a member of the Redbrands, but left town when someone tried to have her killed. She filled the group in to where the Redbrands used to hang out back when she was a member: the Sleeping Giant Inn. The group then decided to head to bed and planned to give the Sleeping Giant Inn a visit the next day. They each rented a room and went to bed.