On 14 August 1901, Islander departed Skagway, Alaska for Victoria, British Columbia, filled to capacity with passengers and carrying a cargo of gold bullion valued at over $6,000,000 in 1901 dollars.

Sometime after 2:00 am on 15 August 1901 while sailing down the narrow Lynn Canal south of Juneau, she struck what was reported to be an iceberg that stove a large hole in her forward port quarter.

In 1904, equipped with a specially designed barge and diving bell, Finch succeeded in locating the wreck of Islander in 175 feet (53 m) of water and reported a "gaping hole" in the ship's bow.

Unfortunately, Finch did not have the means to gain access to the reported location of the gold in the Purser's Office amidships and as a result only a section of deck rail and grating were recovered.

Apart from the adverse weather conditions, the strong currents, and extremely cold temperatures, salvage from the depth at which the wreck lay was virtually unknown in the early 20th century.

The "gaping hole" first noted by Henry Finch in 1904 turned out to be more significant than suspected: 60 feet (18 m) of the Islander's bow, including the Mail and Storage Room, had been completely sheared off.

In 1996, OceanMar Inc. of Seattle raised capital in the US and the UK to charter a suitable vessel and mount a salvage expedition equipped with an extensive sidescan sonar suite, and a "Surveyor" Remotely Operated Vehicle.

[2] Jolly Roger and her crew spent the following five weeks recording every aspect of the bow section and side-scanning the debris field lying between the original point of impact and the ship's final resting place.