Go ashore at Sand Bluff. There is a hidden entrance to a cave somewhere in the jungle. The treasure is hidden in the cave.
Moor at the beach, and follow the path into the next area.
Then take the left path further into the jungle.
Here the path splits in two, one around the hill and one straight to the next area. Instead of moving on, walk up the hill and look down to the spot just beyond the u-bend of the path. (!Pirates are common here and attack in large groups!)
Then stand in or very near the circle. ( Actually a short way beyond the red circle)
You are standing in a tunnel facing one way, and as soon as you appear there is a pirate/smuggler attacks you from behind. When you turn to kill him, keep facing that way and continue along the tunnel. At the intersection turn right. The very first right after that is the exit, but if you go out there you can't return to the cave unless you look for the point where you fell. So, instead of taking this tunnel take the second one right. After that the first one left and walk all the way through to the sword pickup. Retrace your steps to the exit and you end up in the final area where the road would've ended had you taken it.