The east-west passage through the hills would make an excellent outpost settlement. It's not only the most direct travel route through the hills to the north, but is also highly defensible due to the lay of the land and its deep network of caverns. Despite the rocky terrain the land is fertile and natural streams feed into the area from a source higher in the hills.
Unfortunately, the region is occupied by at least one tribe of native inhabitants. They are a primitive agrarian society who cultivate vegetation and hunt wildlife found within region. They also appear to work the stone for ore, though their ability to work it is rudimentary.
These people do not appear to be hostile to outsiders as we've observed members of these tribes exchanging goods, either as offerings or in trade. However, should they become our enemies they would be at a sizable advantage in a siege. Fortunately their single source of fresh water provides an alternative to direct assault.