While coming home late evening, Jenny and Ned catch glimpses of a mysterious figure in the shadows. Squire Armstrong again warns the Gordon household to stay away from his property but the children persist in investigating. A legend of an ancient treasure plays a part in the puzzle.

Charles Armstrong, the squire's nephew, arrives for a visit and soon quarrels with Albert and Ned. The boys are warned away from the sheep, who are about to lamb but one of them chooses not to during a race. Among the consequences is a struggle where Albert and Charles end up at the bottom of mine shaft.