Dragon is at lowest floor of Dragon head village mines. On the first floor there is a elevator, but the door is locked so you have to kill a zombie/ghoul to get a key. (you may have to kill a couple of them).
Now you should be one floor lower. Now run to north-east corner of the map and you will be at another elevator.. this one leads to the dragon.
And for the mining.. there are two different "ore 'veins' or something like that :D" at the dragon. One is in the east and one in the west.
East has platinum(max 1 ore per hit), coal(max 3) and tin(max 3).
West has iron(max 3), coal(max 1) and tin(max 1).
Max amount may be different with lower mining than 200. (not really sure about this, maybe someone could confirm this).