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Since he said where is 'he' I suppose he's already gone to Shallit.
In the cavern just after you enter the cave, look up and to the South and you'll see a hidden ledge (you might notice it on your map as well). You'll need Levitate to get up there and you should be able to find a potion or two lying around in the lower cave if you don't have that ability handy. Once up, you'll quickly encounter 4 of Rels' friends before you meet the well equipped Rels himself.
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