Sunken Russian warship found off coast of South Korea sparks investor frenzy amid claims it was carrying £101bn in gold

Claims prompt South Korea's financial regulator to issue warning against possible investment losses

A South Korean company’s claim to have discovered the wreck of a Russian warship containing an enormous amount of gold when it sank 113 years ago has triggered a frenzy of investment.

The 5,800-ton Dmitrii Donskoi was built in the 1880s and went down during the 1904-05 Russo-Japanese war, off the coast of the eastern Korean island of Ulleungdo.

The vessel was rumoured to be carrying the fleet's funds when it sank, and salvage company Shinil Group speculated about 200 tons of gold bars and coins, worth 150 trillion won (£101bn) today, would still be on board.

The Seoul-based company, which was established last month, released photos and videos taken by search submarines of a wreck, including a section which appeared to show the ship’s name in Russian.

It said it hoped to raise the wreck from its depth of more than 400m within months.

However, the investor frenzy led South Korea’s financial regulator to issue a warning against possible investment losses.

Shinil Group released photos and videos showing what appeared to show the ship’s name in Russian (EPA)

Shinil, who said its search team included experts from Britain, Canada and South Korea, claimed it was the “only entity in the world” to have discovered the ship.

But other companies have made similar claims, though none have taken steps towards raising the wreck.

One of them, Dong-Ah Construction, was accused of spreading false rumours to increase its stock prices and later went bankrupt.

Shinil’s announcement was also disputed by the government-run Korea Institute of Ocean Science and Technology (KIOST), which said it had discovered the wreck in 2003.

Its website shows photos, dated from 2007, of what it said was the wreck, along with maps of its general location.

Shinil has yet to confirm the vast treasures the ship was rumoured to be carrying when it was sunk (EPA)

Shinil is unlisted but its president recently agreed to acquire shares in a local company, Jeil Steel.

After Shinil’s announcement about the Russian ship, Jeil’s stock prices rose by 30 per cent on South Korea’s KOSDAQ market on Tuesday.

They continued their steep rise on Wednesday morning, before Jeil clarified Shinil’s president would be its second-largest shareholder if the deal goes through.

Jeil also said it has “no relation to the treasure ship business.” Its stock prices dropped more than 20 per cent after Thursday’s trading.

South Korea’s Financial Supervisory Service said on Thursday it is closely monitoring trade activity involving the shares of Jeil Steel.

If the company were to apply for salvage rights, it would need to pay 10 per cent of the estimated value of the wreck.

The Dmitrii Donskoi, a Russian naval cruiser, was sunk 113 years ago after a battle with the Japanese navy in seas of South Korea's eastern Ulleumg Island (EPA)

The Dmitrii Donskoi was scuttled by her crew in 1905 after battling Japanese warships in the Battle of Tsuhima.

In the past, Russian scholars have cast doubt on the claim the ship contains “treasure,” saying Russia was unlikely to put so much gold on a single ship and it must have been much safer to move it by train.

They also have said some gold coins could have been aboard the ship to pay the salaries of Russian navy officers.

Some experts also said it is unlikely the Donskoi, a thickly armoured warship with more than 12 artillery pieces, 500 sailors and presumably 1,600 tons of coal, would have had room for 200 tons of gold, which would be double the current gold reserves at South Korea’s central bank.

And there are questions about the gold’s value being estimated at £101bn — the Bank of Korea’s 104 tons of gold reserves are valued at around £3.6bn.