There is an underground path from east dounby to west dounby, once you have beaten the foes, you will run into the fellow you need to find, he doesnt speak normal english so you have to go all the back to east dounby to the bar and get the fellow that sent you to find him to translate. then its back through to west dounby through the grasslands until you get to some ruin and a door that goes underground where you are looking for the axe. Im still in there trying to find my way around, lots of portals and I havent been keeping track of which ones I need to remember... good luck!