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Drops from senpou temple assassins at Ashina Castle gate.
They drop Scrap Iron frequently, not Black Gunpowder.
i cant find this .... what is the % drop?i am killing people for like 2 hours :(
If you have found centipede demons kill the small ones (spits fire), they gives a lot b gunpowder.
You can get a lot by killing small centipede demons, at least I got a lot from the ones which are near the girl divine heir, in the cave.
It also drops by enemies at Hirata Estate. Ring the Demon Bell and then farm at the Main Hall idol. You can get Scrap Iron, Mibu Balloon of Wealth, Oil, Pellets, Dousing Powder, Black Gun Powder. Or run from the Estate Path idol all the way up to the the Main Hall. You will get 1 skill point and 1300 gold per run. You can get the Black Gunpowder also from the small enemy at the Bell Demon's Temple idol.