Whetstone is a favored gift in Dragon Age: Origins - Awakening. It gives +10 approval (with diminishing returns) to Nathaniel Howe, and +5 approval (with diminishing returns), to any other companion.
Located in a crate just before you go into the courtyard of Kal'Hirol.
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Gifts can be sold to a merchant or given to certain party members to influence their approval rating.