the mountain town is a small town in the central north part of the map. it contains one of the starting brothels for the game as well as, a mine, 2 black smiths, one of there daughters is the town merchant, a bar/slave house, and other random buildings.
To get to this town from the main city, go out the east gate and follow the road until the intersection. South leads to the Desert Town, north to the Mountain Town. Continue north to a guarded gate, proceed north along the edge of the mountain where you will find two guards at the entrance to the Mountain Town.