Ore can be mined from the mine which is located a shot ways east of the main town in the side of the mountain. Then, blacksmithing can be used to smelt the ores in the furnace into bars. Bars can used to upgrade your equipment to have better stats.
You will need to purchase a pickaxe from a vendor in order to mine ores.
Only the ores within your Miner level will be visible to you. Increase your Miner level be increasing combat and purchasing a better pickaxe and/or wearing equipment with Miner points.
It takes about 1 hour for ores to regenerate in the mine and typically you will find 10-15 ores at a time. Be sure you check around all the rocks/columns in the mine.