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It has the same appearance of a normal detonator. However, this one is broken and therefore cannot be equipped. It is a simple miscellaneous item used to show the origin of the explosive collars from the Little Yangtze camp later used by Elijah in the Sierra Madre. Its only real use would be for decoration.
It is located in the Little Yangtze watch tower. Once you enter the Little Yangtze watch tower, it's on the desk in front of you.