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The department was told of a seal with an object around its neck, near Lovers Leap on the Otago Peninsula, late last month.
It took a scramble down a bank and a spot of moonlight for marine ranger Jim Fyfe to free the young seal of its necklace, which was believed at the time to be a G-string.
The item was now thought to be a hat.
After the story ran in the Otago Daily Times it was picked up by other media outlets internationally, and the object was kept at the Dunedin Doc offices as a memento.
Mr Fyfe said he had "washed my hands" of the item, but the office decided to give it to the Million Dollar Mouse campaign, which aims to eradicate mice from the subantarctic Antipodes Islands.
Mice were the last remaining pest on the islands, 800km southeast of Bluff, and the campaign aimed to raise $1 million to help Doc complete the work.
To help raise money and awareness, the campaign was auctioning a "framed G-string" and the article from the ODT on TradeMe.
Mr Fyfe thought the item was "possibly a hat".
"I wouldn't wear them either way, and the owner should have made sure they didn't end up in the marine environment."
The auction, which closes on Saturday, had attracted more than 45,000 views last night, and bidding was up to $230.
Several viewers had commented that the item was a cap, rather than G-string.
The seller agreed, saying "we think you might be right" but added the item was "so decayed it has been hard to determine its original form and purpose".
Doc biodiversity assets programme manager David Agnew said if it was a hat "that would explain why it was on its head".