NOTE: Since this cave has many difficult creatures, and the rewards are not terribly exciting, it is highly reccommended that you get a team together and complete all of the quests in this cave at one time, instead of making multiple trips.
Go down into the Edron Orc Cave. The entrance is southwest of the castle (here). You can access this area via a drain in the basement of the Edron Flats.
Once in the hole, you will meet only Orcs, Poison Spiders, Orc Spearmen and Orc Warriors. Follow the cave to the west and then south. There are a couple of side rooms, but basically there is only one way to go.
On the second level, you will meet Poison Spiders, Orcs, Orc Spearmen, Orc Warriors and Orc Berserkers. After you drop down, follow the map below, by walking west to a three-way crossing. There, continue walking all the way north and then west. The treasure chest is in a room at the far north-western end of the floor, guarded by 2-3 Orc Shamans. You can easily tell the right room, as it has a Sacrificial Stone in its center.