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I found the key in the Smelter Overseer's House in Markarth and dispite looking in Markarth, the Wiki, and the strategy guide I have been unable to locate the Sluice Gate that this key is for.
- This may be an overlook for a gate/building that the makers did not include in the final game. Another example of this is Whitesand Manor, whose key cam be found on the redguard who now lives at the drunken huntsman in Whiterun, whose name escapes me. -Norlack