The Arctic Faun's Island is one of the small Southern Ice Islands, located between the main continent (north-west of Carlin), Senja and Vega, here. The island can only be accessed if you shipwreck there when taking a shortcut route with Captain Charles from Port Hope. Since this is a random event, you cannot visit this island anytime you want. You can only visit the island once every 20 hours, but you can ask for a shortcut until you get there.
One Silver Rabbit spawns on the surface, and there is a small cave inhabited by Arctic Fauns under this island. You can use a barrel here to obtain two Small Enchanted Sapphires and most probably other items as well.