Live recordings of Bob Marley and the Wailers, which were found by chance after spending 40 years in a damp hotel basement, are to appear at auction.

The reel-to-reel analogue tapes were recovered during the clearance of a hotel in Little Venice, west London, but, with water damage, mould and grime oozing out, they looked beyond repair and were going to be binned.

But after a two-year restoration by a sound engineer, Martin Nichols, the 10 tapes will be auctioned off next month.

The recordings were of 1970s gigs at the Lyceum theatre in the West End of London, the Rainbow theatre in Finsbury Park, and the Pavillon Baltard in Paris. They include some of Marley’s greatest hits including No Woman No Cry, Is This Love and Jamming.

The concerts were recorded on what was then the only mobile studio vehicle in the UK, loaned by the Rolling Stones. The recordings were rescued by the London businessman Joe Gatt, who said he had a friend working on the hotel clearance who called him about the tapes. At the time they were on a truck heading to the tip, Gatt said.

Gatt asked his friend and neighbour, the jazz singer Louis Hoover, what to do next.

Hoover said: “When I finally saw the labelling and footnotes on the tapes, I could not believe my eyes. But when I also saw how severely water-damaged the reels were it was pretty gut-wrenching … there was plasticised gunk oozing from almost every inch.”

Bob Marley and the Wailers live at the Pavillon Baltard in Paris, in 1978

He asked who might be able to save the tapes and was directed to Nichols, in Weston-super-Mare.

Nichols said: “When I first saw the tape reels I should really have said: ‘no thank you, guys,’ as they were covered in mould and had clearly suffered massive water damage. If anyone had even tried to play the reels in that state all the content would have been destroyed and lost for ever.”

The painstaking restoration had been a labour of love, Nichols said.

Hoover recalled hearing the restored tapes for the first time. “We were immediately transported back in time. Especially Joe, as he’d actually been there in the crowd at the Lyceum on 18 July 1975, when he was just 22, on a friend’s spare ticket.”

The tapes, with digitally restored audio, are being sold by the specialist auction house Omega in Merseyside, in three lots on 21 May. Each has a low estimate of £25,000 and the auctioneer Paul Fairweather predicted worldwide interest.