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Otago Regional Council harbourmaster Steve Rushbrook said Carolina M hit the ground near Wellers Rock about 3am on Saturday and started taking on water.
"Looking at the damage, he may have gone over a rock wall of some description," Mr Rushbrook said.
"With the help of a local fishing vessel, the Mary Ann, the Carolina M made it to a point of safety — a known shallow sandbank in the area."
Three people were on board at the time but no-one was injured, he said.
At that point, emergency services and the harbourmaster’s office were contacted and responded with a boat and salvage pumps.
Soon after, they were joined by a team from the Careys Bay marina and some divers.
A temporary repair was made to the hole in the front of the boat and the pumps were used to pump water out of the hull and refloat the vessel, he said.
"By 10am, we were in a position to approve removal of the vessel from the location it was in at Wellers Rock, and it was safely passaged to Careys Bay."
He said the boat was removed from the water at Careys Bay on Saturday night and permanent repairs were being made.
Mr Rushbrook was pleased the situation was not worse.
"It’s a standard sort of vessel, and any sort of vessel has fuel and oil on board.
"He hit on the front end of the boat, so there was no damage to the fuel tanks or the engine room."
He said it was quickly determined that the vessel did not pose a threat of ecological disaster.
But if it had sunk in the harbour channel, it might have caused major problems for shipping movements in and out of the harbour.
"From my point of view, it was very lucky we were able to refloat the vessel and save the vessel.
"And to get that vessel from the point of contact to a safe point where it was able to be lifted out of the water — the whole team here were absolutely brilliant.
"We were also very lucky there were no injuries."
Mr Rushbrook said Maritime New Zealand was investigating the incident.
"It’s very rare for something like this to happen in Otago Harbour.
"For whatever reason, the guy’s lost his situational awareness and he’s run the boat aground.
"You shouldn’t be doing that in a commercial vessel on this harbour. That’s what we strive to avoid.
"So yes it’s a rare thing, so it will probably go to the highest level of investigation."