The lumber mill is a building generated in a random location on the map. It gives the player the option to exchange their wood for gold coins with 1:1 rate.
To exchange wood for gold, click on the lumber mill. If you have at least one wood, you will get gold back. Upon clicking on it, a you will lose one wood, and one piece of gold will pop out. You can click it and make gold pop out from any distance, but your minions have to physically pick up each piece.
If you don't have enough wood, a message will pop up at the bottom of the screen telling you that you don't have enough wood.
Tip and Tricks
Gold is not as helpful as wood unless you are planning to upgrade hats and shields quickly. It's a good idea to use this structure more in the mid game, after you maximize your minions number to five.