Location
The cave is found at 1529W 1534S, pretty much due East of Roseborough on the western slope of the Stonewall Range. It is usually marked on your map when you get close as you explore the general area. Its existence is mentioned as a rumor in Roseborough.
Outside
Position 1 is the cave entrance. It can only be entered naturally by members of the minute races. Larger races can only enter while under the influence of the Shrink spell.
Inside
Position 2 is a Halfling named Renzo, leader of a gang of thieves. He can offer you a quest if you are so inclined.