The Mortar Falls sign can be found on the trail as Anderson and Casey walk through the forest to the Cauldron Lake General Store. Just after walking down the broken steps, take a right on the road, followed by a brief detour into the woods.
Text: “The powerful feat of nature will revive the spirit as it does the surrounding nature.
The churning, grinding waters at the bottom of the falls resemble a mortar and pestle quite like the one the Witch of Cauldron Lake is fabled to have used to travel through the night sky.”
The "Witch of Cauldron Lake" is revealed to be Barbara Jagger in a sign shown later in the same chapter. In Alan Wake 2, there's a greater presence of the mystical and magical, with items embued with personal significant importance.
