Mist Cave is your very first dungeon you'll have to venture. It has only one floor and four items:

• Potion (x2)
• Eye Drops
• Tent

Boss: Mist Dragon
Strategy: do not attack it when it's in mist form or it'll counter with a nasty magic.

Once the boss is defeated, you'll have to watch a cutscene, then you'll wake up near Mist town. Before entering unequip everything from Kain because he'll leave the party.

A new character is introduced and her name is Rydia and she'll join your party later on.