A South Korean salvage team has discovered the wreck of a Russian warship that was sunk in a naval battle 113 years ago and is believed to still contain 200 tons of gold bullion worth 150 trillion won, or $196 billion.

The Russian Imperial Navy cruiser Dmitrii Donskoi was discovered at a depth of more than 1400 feet about 2km off the South Korean island of Ulleungdo.

A joint team made up of experts from South Korea, Britain and Canada discovered the wreck on Sunday and used two manned submersibles to capture footage of the vessel, with the company behind the discovery promising to use a percentage of the money to fund the construction of a railway line linking Russia and South Korea through North Korea.

The video includes images of extensive damage to the vessel caused in an encounter with Japanese warships in May 1905, along with cannons and deck guns encrusted with marine growth, the anchor and the ship's wheel.

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The identity of the 5800-ton warship was confirmed when the crew of one of the submersibles were able to read the name on the stern.

"The body of the ship was severely damaged by shelling, with its stern almost broken, and yet the ship's deck and sides are well preserved", the Seoul-based Shinil Group said in a statement.

Launched in St Petersburg in August 1883, the Dmitrii Donskoi was designed as a commerce raider and fitted with both a full set of sails and a coal-fired engine. The ship spent most of its career operating in the Mediterranean and the Far East and was deployed to Imperial Russia's Second Pacific Squadron after the Japanese fleet destroyed the majority of Russia's naval power in the Far East in the opening salvoes of the 1904 Russo-Japanese War.

Wreckage of Russian Imperial Navy cruiser Dmitrii Donskoi. Image / DONSKOII
Wreckage of Russian Imperial Navy cruiser Dmitrii Donskoi. Image / DONSKOII

The squadron was intercepted by the Japanese fleet in May 1905 and decimated at the Battle of Tsushima. Assigned to protect the transport ships at the rear of the formation, the Dmitrii Donskoi managed to evade the attacking force, but was later intercepted steaming for the Russian port of Vladivostok.

Around 60 of the 591 crew were killed and further 120 injured before Captain Ivan Lebedev anchored off the island of Ulleungdo and ordered his men ashore. The following morning, May 29, 1905, the ship was scuttled offshore and the crew were taken prisoner by Japanese landing parties. Captain Lebedev later died of his wounds.

There are reports that the Dmitrii Donskoi was carrying the fleet's funds and went down with 5500 boxes of gold bars and coins still in its holds to stop the Japanese seizing it. Shinil Group estimates the gold would have a value today of $196 billion.

The company says it is aiming to raise the ship in October or November. Half of any treasure found aboard the vessel would be handed over to the Russian government, the company said, while 10 per cent of the remainder will be invested in tourism projects on Ulleungdo Island, including a museum dedicated to the vessel.

A portion of the rest of the treasure will be donated to joint projects to promote development in north-east Asia, the company said, such as a railway line from Russia to South Korea through North Korea.