After defeating the second pack of wolves, grab any resources nearby.
There is a Sawmill in front of your Hero. If you control a Sawmill, it provides you with +1 wood every day.
This Sawmill is controlled by no one. This is indicated by the gray (neutral) flag above it.
Double left click on the Sawmill to get control over it with your hero.
Capture the sawmill, then head south along the path. Loot any old skeleton corpses you find along the way.
If when you try to move it says "not enough movement points", just click on the hourglass to advance to the next turn.
Your next objective is to meet the priestess who is the standing on the path, to the Southeast.
You will come across a Signpost:
"Welcome to Pleasant Valley."
This valley has known better centuries. One might wonder whether its original inhabitants gave it its name in order to attract the fool-hearted settles rather then describe its harsh surroundings. Perhaps they named it for what it might become in the future with a thousand barrels of sweat and a little help from a powerful earth magic druid.
Some loyal troops stand in your way. Move the cursor above them, then press and hold the right mouse button to get detailed information on them.
Double click on the friendly troops to bring up the encounter screen. But this time instead of attack and retreat, it says that creatures with a thirst for glory wish to join your army, what will you answer? click on Accept to have the additional units join your army. This complete the meet the priestess objective.
New creatures have joined your army. You can view them in the Hero window.
Double click on the portrait of your hero to open the Hero window.
Your new objective is now to reach the nearby village.