The remnants of its code can be seen in
hl2_dll\weapon_flaregun.cpp, which also defines env_flare. The weapon was originally, as its name suggests, intended as a handheld flare-firing device that sets objects and NPCs on fire. Its code briefly defines basic Precache, PrimaryAttack, and SecondaryAttack methods.
Flares are fired briefly in Route Kanal, but there is no gun to go along with them.