I guess you can glue inside where the gap is, an sleeve from leather that you glue with wheat starch, you need to make the new leather a bit thinner and slide it inside, it might be handy to have a piece of wood modelled after the sheath inside so you can use a folding bone to press the old and the new leather together against the wood and then let it dry. After gluing i would use a special leather reviver, from a restorationmaterials supplier for book restoration.
Good luck with it.
regards, Martin
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