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As 'Druk' makes mention of the small 'shrine' being nailed onto the rock face wall, maybe it was formerly a small quarry - possibly one of the quarrymen that could have died there?
When you get in there one side has steep rock faces,the shrine is on one of those,your interpretation makes sense,the villagers always called it dead man’s valley,as a kid I just took it for granted people had died in there,but as kids are wont to do I never thought beyond that.