You can create weapons and armor using the materials dropped by slain monsters. To start making equipment, simply follow these instructions:
1. Tap the circle icon and go to "Armory".
2. In your Equipment Menu, Tap "Forge" to talk to Boldon the Blacksmith. 
3. Choose if you want to create a weapon or armor.
4. Tap on the equipment you want to create and then tap "Forge".