Demlin has a collection task that the player can complete by giving him a Black Powder.
When given a Black Powder, the player will receive his scry totem, which can be used to call him to special areas where he can be of help. One of these areas is located inside of the Troll Caves, in which he helps clear a path using his special explosive "Demynite" and gives the player the explosive's recipe.
Demlin can be found in or in front of his home which is located in front of the Witches' Guild. His house is the first hut on the right-hand side of the entrance. Other places he is found at is inside or in front of the mine.
You can enter Demlin's house by giving him 3x Iron Bar, Fire Salt, and 3x Moon Bar respectively after you get his totem. In it, you can get random ores by interacting with the mine on the northeast corner.