I wonder if you were far enough away, and it was treated as a thrown weapon? That's the only thing that I can think of that would make it disappear during a battle (well, that and having its final charge used, like a wand).
If it did get thrown, you should still be able to pick it up afterwards, if you can find it. I'm not sure if it's a permanent item, one that stays around even after you leave the map; if not, it might be gone for good.
Glad that it's off your hands. Hope you got quest credit first
