We decide to expand further, creating a settlement on the highest peak we can find, as close to the edge of the mountain range as possible. We build it at the peak of this mountain, and the citizens sent there report seeing several of what looked like villages down in the desert that lie just on the edge of the mountain. They can't make out any figures clearly, but they're clearly inhabited. (Naga civilization discovered)

We also start quietly raiding the dwarves. We take out two of their smaller settlements that lie on the surface. They are wiped out without much resistance, they were apparently almost exclusively dedicated to smelting and mining. There were no survivors and we took a good supply of the white metal, as well as schematics for what looked like a giant deformed humanoid made of metal or maybe rock. We also take their tech that was there. (Coal discovered, Meteorite metal discovered, swords discovered, Metal Golems discovered [Don't have the right materials though]. Advanced underground mining discovered.) We sent 80 humans to raid, 30 came back.
_____________________________________________
A. Try to improve caves.
B. Try to improve weapons.
C. Research new technology.
D. Practice Magic.
E. Found a New Settlement
F. Explore
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A1. Betray the Dwarves.
B1. Ask for more tech.
C1. Renegotiate your Agreement.
D1. Quietly raid them, try and pass it off as other dwarves raiding them.
E1. Do nothing.
F1. Your choice
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Population: 400 (+60 every turn)
Farmers: 80
Miners: 60
Militia: 200
Smiths: 60
Idle: 0
Food: Plentiful.
Architecture: Underground Fortress
Weapons: Pickaxes, Swords, and Bows
Tech: Above Average
Magic: Below Average
Defenses: Natural Mountain Barrier + Narrow Cave Hallways + Gates and Barricades

Won't let me post map, keep getting duplicate image file.