This bomb is not very useful in combat. Detonating it would kill both you and the enemy. It can be used as a mining method, detonating deep into a mine.
The bomb may be obtained from the Volcano as a drop from the Fire Golem.
It can may detonated in the inventory to obtain various kinds of loot, such as Copper Ore 
, Silver Ore 
, Gold Ore 
, Promethium Ore 
, Promethium Bars 
and etc.