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Lumber Axe, as of 1.0.4
Lumber Axe is an unimplemented item added by Tinkers' Construct. It has an icon and model is a multi-colored square. You can sometimes find these in dungeons and Battle Tower chests. It is highly recommended to leave this item behind.
This seems to be some sort of glitch involving the Lumber Axes from the Tinker's Construct mod as it comes in stacks in the tower chests, but cannot actually stack when you manually try to stack it.
If you right click on the wall with it, you will place a torch, and the game will crash. If it is used to destroy anything will cause your game to crash, and the block you targeted will not be destroyed.
Trivia
Cutlass in-game
Lumber Axe is not the only item using this sprite, the other one is called "Cutlass"
