In order to attempt farming it, the save game has to be made before jumping down into the (second pair) of wraiths you fight. The chest will be in the middle up against the right wall.
This diagram enables the user to craft Beann'shie. It can be found in a chest within the ruins of the Asylum burnt down Hospital on Chapter 1, but this is extremely rare. It is also possible to find it in the chest in Ruined elven baths.