With its promises of lost treasure and the potential to rewrite Australia's history, the story of the Mahogany Ship is one of the country's most enduring and fascinating legends.

For more than 150 years, the tale of a ship that pre-dates Captain Cook supposedly buried in the sand dunes of south-west Victoria has intrigued treasure hunters and academics alike.

From Spanish and Portuguese caravels to 15th-century Chinese junks, the origins of the wreck have been speculated on by historians for decades.

But, like many legends, it appears to be one built on half-truths, mistakes, exaggerations and even out-and-out lies.

According to detailed research by at least two amateur historians, it's probable the so-called Mahogany Ship was not a pre-colonial ship of discovery, and even more likely there never was a wreck in the dunes between Port Fairy and Warrnambool to begin with.

The wreck in the dunes

The popular version of the story told by early settler Hugh Donnelly goes that, in 1836, three whalers sailed from Port Fairy to nearby Warrnambool in search of seals, but their vessel capsized and one man drowned.

The two remaining whalers walked back to Port Fairy — a distance of about 25 kilometres — and along the way they reportedly saw "an ancient wreck" high up in the sand dunes.

This story wasn't recounted until many years later, but it was one of many stories that emerged in the latter half of the 19th century of a supposed ruined ship on the shores of Armstrong Bay.

A full size re-creation of the 15th century Spanish caravel, Notorious, was built by a Warrnambool district man inspired by the legend of the Mahogany Ship. ( ABC, file photo )

A monument to Portugal's great navigators, which was erected in Warrnambool on the strength of the Mahogany Ship legend. ( ABC South West Victoria: Matt Neal )

Theories about the wreck's origin abounded. One witness suggested the ship was made of mahogany, which strengthened the idea it was a Spanish or Portuguese caravel that had wrecked in the region prior to the arrival of the British.

And thus a legend was born.

Such was its popularity that, in 1992, the Victorian Government offered $250,000 to anyone who found the wreck, leading to waves of treasure hunters trekking and digging in the dunes.

If you visit Warrnambool today, you can walk the Mahogany Ship Walking Track, visit a display about the legend at the local maritime museum, stay in the Mahogany Motel, and drive past the housing estate called Mahogany Gardens.

But the celebration of the legend goes further, particularly the Portuguese theory.

A scenic lookout in Warrnambool boasts a memorial called a padrao which commemorates Portugal's great navigators, and a Portuguese festival is held in the city every two years, despite the region having no visible Portuguese community.

'Evidence is zero'

The Portuguese theory regarding the Mahogany Ship was repopularised in the late 20th century by renowned lawyer and mathematician Kenneth McIntyre in his 1977 book — The secret discovery of Australia: Portuguese ventures 200 years before Cook.

McIntyre's book was on school reading lists for a time, giving the idea Portuguese sailors may have reached mainland south-eastern Australia before the British a new level of credence.

While some scholars backed McIntyre's ideas, many at the time did not.

Dr Murray Johns says the legend was based on "reproducing suppositions year after year". ( ABC South West Victoria: Matt Neal )

Amateur historian Murray Johns, who has studied the Mahogany Ship legend for 60 years, said "there was never any evidence" the ship was Portuguese or Spanish.

"There was so much theorising and very little, if any, analysis of the data — that's what surprised me," Dr Johns said.

"It was just reproducing suppositions, year after year after year."

Even the name is a mistake, he said.

"The evidence that it even involved mahogany is zero," Dr Johns said.

"One Captain Mason in 1876 wrote a letter suggesting that he'd seen the wreck and initially he said the wreck could have been mahogany. Fourteen years later he denied that, and said 'No, it wasn't mahogany', but the mahogany story stuck."

Dr Johns said the suggestion of a mahogany ship fuelled the theory it would be Spanish or Portuguese, whose shipbuilders used the wood for centuries.

But none of the supposed pieces of wood that came from the wreck were mahogany.

The Warrnambool housing estate of Mahogany Gardens is just one of the mahogany-themed aspects of the city. ( ABC South West Victoria: Matt Neal )

"The scientific analysis of pieces of timber said to have been cut from the wreck have all been Australian timbers [with] two of the three … specifically identified as timbers coming from northern NSW and southern Queensland," Dr Johns said.

Dr Johns said this meant the wreck in the dunes was more than likely an Australian-built ship.

At a Mahogany Ship symposium held in Warrnambool in 2005, he suggested the wreck was actually that of Unity, a boat built in New South Wales in 1808, stolen by convicts in Tasmania in 1813 and never seen again.

"My story's been out for 20 years — very few people have taken it up," Dr Johns said.

'Seeking something more from their lives'

The vast majority of "eyewitness" accounts of the Mahogany Ship conveniently emerged after the wreck had been supposedly swallowed up by the sand dunes around 1880.

Local amateur historian Jenny Fawcett wrote that "by 1890 there were some 50 people who claimed to have either seen the old wreck, or claimed to be able to provide evidence of the wreck from someone who had seen it".

Historian Jenny Fawcett says myths persist so strongly because "the voice of reason is never heard". ( ABC South West Victoria: Matt Neal )

"Of these, there are only four reliable accounts, and only two of these were ever verified by others," Ms Fawcett wrote.

After digging back through the primary sources and investigating the eyewitnesses, she said she was now "98 per cent" sure there was never a wreck in the dunes between Port Fairy and Warrnambool.

One of the key eyewitnesses was Hugh Donnelly, who claimed in letters and a journal to have visited the wreck three times in the late 1830s and early 1840s.

However Donnelly was not even in Victoria at the time he said he was — a fact only uncovered by Ms Fawcett's research.

"Even to this day, I'm particularly appalled at academics who will grasp at some information and they don't go back to the primary sources," she said.

"The people who repeated those stories or who embellished them, a lot of them were not even here at the time.

"[They] were seeking something more from their lives."

Donnelly's original story of the two sailors walking back to Port Fairy in 1836 was true but he added the bit about an ancient wreck, which helped sell the mystery.

Ms Fawcett said many witnesses, including Donnelly, were criminals with histories of dishonesty and fraud-type offences, while other accounts were second- or third-hand retellings said to have come from people who never claimed to have seen the wreck themselves when they had the chance to in their lifetimes.

"Any accounts from the 1880s are tainted [by Donnelly]," she said.

The first recorded account of the "ancient wreck" appeared in a Portland newspaper in 1847, but Ms Fawcett dismissed this article as the misinterpreted ramblings of "some drunken [sailors] in a pub".

She said the so-called wood samples were also questionable.

"Unless you find a whole ship, any wood is superfluous because it could come from anywhere and from any time," she said.

But the myth that there was a 16th-century Portuguese caravel lost in the dunes near Warrnambool persisted because "the voice of reason is never heard", Ms Fawcett explained.

"Nobody wants to hear it because there's no excitement, there's no glory that surrounds it," she said.

Dr Johns agrees.

"Of course it would be fun if we could find a Portuguese caravel on the southern coast of Victoria," he said.

"The chances of doing so are very slim indeed in my opinion."