The vessel, MV Captain Jim owned by RMI Marine Ltd., was returning to the harbour at around 2 a.m.

Divers have found the body of a crew member after a 12-metre vessel sank off Devils Island at the mouth of Halifax harbour early Tuesday.

The vessel, MV Captain Jim owned by RMI Marine Ltd., was returning to the harbour at around 2 a.m.

According to the company, the boat had three people on board at the time, a senior captain, a deckhand and a commercial passenger.

The captain and passenger were able to safely make it into a life raft, however the body of the deckhand was recovered by naval divers inside the sunken vessel by midday.

Maj. Amber Bineau, public service officer with the Joint Rescue Coordination Centre, said the initial emergency call reported the boat had lost power.

"In a short amount of time with our communications with the vessel, it reported that it was taking on water, and taking on water rapidly," she explained. "At that point we escalated our efforts to include a mayday call to get assets out the vessel as soon as possible."

It was determined a Halifax Port Authority pilot boat would be able to reach the area the fastest, and the crew was able to rescue the two in the life raft.

Bineau said the pair did not have survival suits on, but were wearing flotation devices and were determined to be in good condition after being checked by staff. She said the rescue crew got to them within an hour after the last call.

"The other individual was not in the life raft and that's when our search efforts escalated further," she said.

A Hercules and Cormorant helicopter, along with three coast guard vessels, participated in the search of the area near Eastern Passage.

A Canadian Forces fleet diving unit out of nearby Shearwater also went to the scene soon after the initial call came in, returning later in the morning when visibility improved.

Bineau said all of the staff from the JRCC are thinking of the crew member's family, friends and colleagues at this time.

"We had hoped for a positive outcome. It's never easy when we have to call off our search under these circumstances."

In a statement issued by RMI Marine, the company says the deckhand's family has been notified and their thoughts and prayers were with them.

He has not yet been identified.

"We sincerely regret the passing of one of our dedicated and loyal employees and he will be missed by his coworkers and friends."

The Transportation Safety Board of Canada dispatched a team to Eastern Passage to investigate the incident and RMI Marine says the company looks forward to their findings.

The board said investigators were interviewing people on Tuesday, but had no other details to share.

RMI Marine's website said the company in Eastern Passage has been specializing in diving and marine port services for 30 years.

With files from Canadian Press