I found the mage, i think, in a dungeon reachable through the tunnel behind the tower colony and to the east. The tunnel stretches from behind the eastern wall of Thorious's Estate in East Mertis, paralel to the Southeastern Road, behind the Testing Grounds, to the soutnern gate of the Tower Colony (where the pylon is) and then stretches westwards and ends right next to the entrance to Komlos's Smithy. Anyway, there is another lair in this tunnel, along the Southeastern Road, the entrance being on the automap above the Testing Grounds at the end of a tunnel with a bloody body in front. There are also some ogres camped around there so you'll know when you've found it.
Hope this helpes. The most important thing to remember in the Avernum series is to scout every last tunnel, in my view at least. You never know what goodies or foes lie behind that next corner.
P.S. You should be prepared for quite a fight, especially of you're new to the region.