At the moment, the first level of the Dvergeheim mine has maybe one or two rocks that will yield iron ore. I'd imagine each rock is good for 5-10 ore, at best. For more than that you need to wander down to the lower levels where monsters hide. Monsters that are tougher than the skeletons that usually wield the rusted gear.
On a quick romp through the first level down in the crypts, you can easily find 15 or more rusted items, and if each produced one ingot, you can see that this would far easier and less challenging for acquiring ore, than an actual mine.
Make it poor iron, with a draw back to it? Maybe a slight weakness against something? Would be a nice starter material for nubs then? Maybe make it little lesser xp as well, low levels could gather it up when dungeoning and work on that to start with, then eventually move on to mining actual iron for use.
Doesn't work like that. Copper is the starting point for new smiths, with bronze being second. Iron is out of the range of a new smith.