If you know Dorn's quest chain, it's the last encounter. You can't get there until chapter 5.
i.e. far too late to be useful... although Bards still need it, as can't wear Robes, though I've resorted to using the Shield Amulet, which is actually better, then when it gets to one or two charges selling it and then stealing it back (well I am playing a Jester...)
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http://forum.baldursgate.com/discussion/8110/a-guide-to-new-magic-items-spoilers/