This cave is located to the south of Thais, below of the Minotaur Camp.
It isn't a really good place to gain experience points, but a rather good place to get Bat Wings since there spawn 21 Bats.
It is an optional part of the first mission in The Scatterbrained Sorcerer Quest. Irmana will point you to this cave if you say you don't have the required materials.
In the west of the entrance, there is a Minotaur Guard encampment, and to the east, there is a Cyclops encampment, so it's possible to found them lured in the entrance.