Quick answer: You cannot craft Gunpowder in the current version of Windrose because the required Millstone structure is not available. To obtain Gunpowder, you must kill pirates or loot supply crates at Pirate Camps, which respawn daily.
Firearms like pistols and muskets are powerful tools in Windrose, but they require a steady supply of Gunpowder to function. While the game provides resources that suggest a crafting loop is possible, players in the current build will find themselves unable to refine the necessary ingredients. Until the full building system is unlocked, you must rely on scavenging and combat to maintain your ammunition reserves.

Looting Gunpowder from Pirate Camps
The only consistent method for acquiring Gunpowder in the demo is through combat and exploration of enemy territories. Pirate Camps are scattered across the procedurally generated islands of the Archipelago. These locations serve as the primary source for ammunition ingredients.
Step 1: Locate a Pirate Camp on your map or while exploring the islands. These camps are guarded by hostile NPCs.
Step 2: Defeat the pirates guarding the area. Fallen enemies typically drop between two and three units of Gunpowder upon death. This drop rate is luck-based but relatively reliable.
Step 3: Search the camp for supply boxes. These containers often hold additional Gunpowder stacks.

Because Pirate Camps and their inhabitants respawn daily, you can revisit these locations each in-game morning to restock your supplies. Establishing a temporary base near a cluster of camps can create a sustainable farming loop for early-game combat.
Why you cannot craft Gunpowder yet
You may encounter raw materials in the world that imply crafting is possible, specifically Sulfur and Ash. However, the production chain is currently broken due to a missing structure.
In the full release, Gunpowder is crafted by refining resources. The intended recipe requires:
- 25 Sulfur: Mined from nodes using an Iron Pickaxe.
- 25 Ash: Gathered from the shoreline.
To combine these items, you need a Millstone. While this structure appears in the Building Mode menu under Crafting & Utilities > Refining, it is not buildable in the demo version due to technical constraints. Consequently, even if you mine the Sulfur and collect the Ash, you cannot process them into usable ammo until the Millstone becomes available in a future update or the full game release.