Like the magic bag, Amalet is a sentient artifact and is quite ancient, being at least 1,000 Grindean years old. As a sentient artifact, Amalet possesses certain magic properties, one of which is the ability to act as a power source for the mechanical construct GUN-D4M. Amalet is bent on world domination, though at this point (Beta) we are not told why.
Amalet's name is, presumably, a misspelling of "amulet" as its in-game sprite and speech character both resemble an amulet. It is likely that it is meant to be a sentient amulet.
When the player first encounters Amalet, it will be released and will immediately power the GUN-D4M unit which will attack the player. Upon being defeated, Amalet will unleash a final attack as the GUN-D4M unit overheats. Then, as the GUN-D4M breaks down, Amalet will be released.
A dialog will follow between the magic bag and Amalet. Amalet takes offense at being referred to as a possession since its view is that humans are slaves and artifacts are their masters. It vows to teach the player and the magic bag proper respect for artifacts and begins to charge some sort of spell, at which point the player simply picks up Amalet, presumably stashing it in the magic bag.
Upon defeating GUN-D4M and acquiring Amalet, the player receives a quest to give Amalet to Quinton at the Collectors Headquarters. When arriving at the Collectors Headquarters the player bumps into Marino who pickpockets Amalet from the player. The player quickly realizes what has happened and a fast paced chase through Evergrind City is initiated. Marino exits Evergrind City to the south and flees into his Mansion's garden located in Southern Evergrind Fields. The player regains posession over Amalet after defeating Marino in combat and can now deliver the artifact to Quinton.
Interestingly, if you go to the top of the Collectors Headquarters screen and then go right, you can see Amalet on display in the top right corner of the little room there after turning in the quest. This is strange because Amalet is also in your inventory as a key item.