Can be found in the Tunnel of the Founders in the chamber in which Geralt and Saskia battle Dethmold, looted from the body of a Dwarf (see map). Is used to open a door which allows access to a tunnel containing some Rotfiends, Nekkers, and a chest with Temerian leather galligaskins and 22 orens (see map). Due to the collapse caused by Saskia however, Geralt can only access this tunnel on Roche's path. Unless you search for the key very early on during Iorveth's path.