Its in the cave that the guy is right next to. Just match up the map to that part of the cave.
The reward is pretty good for Freedom Isles. Its some gold and a pirate halberd (+attack and some extra gold per battle). Of course you have to fight him for both parts of the reward (was easy ~lv 14, should be cakewalk at 22). But for someone at your level the reward is pretty meh.
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