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The old man is an old elf male living in the elf village of Voloh, which is the second settlement you come to after Atland. Before reaching Voloh you are on Elf Field or by Philip's Castle. In Voloh you meet Thor, the Child of Darkness.

To enter Philips Castle which is cealed, the old man explains to you that you must say this spell which is in his language: Hieke Larmerila Kemuhi. Whether it means anything the game doen't explain.