This quest requires level 65 and Jewelcrafting 375. You can pick it up from Timothy Jones, at 40.67 - 35.35 in Dalaran, in the "Magus Commerce Exchange" in "Cartier & Co. Fine Jewelry".
Chalcedony can be used to make blue gems in Jewelcrafting.
The highest drop rate that the Chalcedony drops off of is a Risen Alliance Soldier (22% drop, 2 out of 9)
The Risen Alliance Soldiers only seem to appear for Horde players only. They can be found around 68.8 - 67.2, for those of you with coordinates; to the east of Mord'rethar.
You can mine it out of: Pure Saronite Deposit, Titanium Vein, Rich Saronite Deposit, Rich Cobalt Deposit, Saronite Deposit, and Cobalt Deposit.
You can also mine it from these humaniods: Ormorok the Tree-Shaper (55.7 - 74.7, The Nexus: 8% chance to drop), Krystallus (39.6 - 61.4, Halls of Stone: 8% chance to drop), and Forge Construct (Multiples of them are in 39.3 - 27.7 and 51.0 - 27.3, Ulduar: 4% chance to drop)
It can also be contained in Titanium Lockboxes. (7% chance to drop, Requires Lock Picking 400)
Seek more information when you search for "Chalcedony"
You return to Timothy Jones to complete this quest.
You will recieve 3 gold 70 silver (6 gold and 63 silver at level 80 in the WOTLK (Wrath Of The Lich King) Expansion, a Dalaran Jewelcrafter's Token, and 6250 experience in completion of this quest.