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These spawn in and around the town part, some on the outskirts. I've not see one in the crater.
Killing the other critters and battle pets seems to make them spawn faster.
Only poor and common quality so far.
I found mine in the same place. However, one did appear more towards the ground as well. That's how it appeared on my map, someone else grabbed that one though. 7:36 PM server time...so it doesn't appear to be time specific as in late night or early morning.