Favric steps forth and addresses the dragon, expressing his wish to form an alliance with it.
He offers three diamonds – as well as your flesh and blood – as a gift.
Consider how you will respond to this before clicking the spoiler box below for possible actions you might take
If you fight, the six cultists side with the dragon.
2. Try and talk your way out of this
If you tell the dragon that there is more value in keeping you alive than eating you alive, you may attempt a DC 15 Charisma (Persuasion) check. If you succeed, the dragon says it can spare your lives, but only if you pledge your life to serving it.
Should you agree, the dragon sees no use for the cultists and kills them all. It takes all the treasure that the cultists were carrying (3 diamonds and a potion of flying).
Then the dragon commands you to search the area around Neverwinter Wood or around the area of Phandalin for sources of great treasure.
It suggests you ask the druid Reidoth where it could be found. If you have already spoken to [Reidoth and he requested that you drive the dragon away in return for guiding you to the Wave Echo Cave and you tell the dragon this, the dragon decides to fake its own defeat by leaving this area, so that Reidoth will accompany you to the Wave Echo Cave, From then on, the dragon expects you to clear out the dangers and report to it once it is done (It will return to his lair once Reidoth has left)].
The dragon would also like to know more about the people that live around this area, so it is interested in knowing more about settlements nearby, particularly smaller settlements such as Phandalin.
And lastly, the dragon warns you that any signs of disobedience, treachery or deceit and you can expect a slow and torturous death. And don’t expect to be able to run away as it will hunt you down – something it is very proficient at.
Should you ask, the dragon is called Venomfang.