Life fires, also known as Warrior Spirits, are found in chests as little blue flames. Life fires are obtained from chests, and are only accessible if you have acquired the Flame Sword in addition to opening two previous chests without losing any armor or the Flame Sword itself. Beating a boss will also give you a life fire if you either already have one or have not died at all in the level, regardless of the current equipment obtained. It is not necessary to obtain Mjollnir's Power to acquire a life fire.
These then unlock hidden 'Valkyrie' levels, where the amount of life fires serve as the life count within the hidden level.
The player will always be able to acquire their first life fire after opening seven chests without taking damage, i.e. Opening four chests to obtain every piece of equipment followed by two chests containing treasure.