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To mine iron and coal, you need to have the pickaxe, which can be acquired early in the game. Iron can be found in the bear's cave, and coal is located on the walls of the giant snake's cave. To craft better armor, you’ll need to have the mansion and the forge built. With that equipment, you should be well-prepared to defeat the dragon. I hope this helps!
You can find Large Stones scattered across almost all maps, including the cave behind the deer. The game has an excess of breakable rocks, so there should always be plenty available.