On 4 December 1912, The Lady Elizabeth left Vancouver bound for Delagoa Bay Mozambique, with a shipment of lumber. The ship encountered severe weather halfway through the voyage and was damaged just off Cape Horn. Four crew members were lost overboard, along with the ship’s two boats and part of her deck cargo. She also sustained damage to the deck fittings, wheel, moorings, and other parts of the ship. Captain Hoigh ordered the ship to the nearest port for repairs. The Lady Elizabeth altered course for Port Stanley, Falkland Islands. Fifteen miles outside Port Stanley, the Lady Elizabeth struck Uraine Rock just off Volunteer Point and suffered a six-foot break in the hull and keel along with a foot long hole. The ship began to sink but was able to get to Port Stanley for repairs. After the ship was examined, the Lady Elizabeth was condemned (declared unseaworthy) because of the damage.
In June 1913, she was condemned and converted into a coal hulk. She was sold to Crown Receiver of Wrecks, Falkland Islands for £1,000. The Lady Elizabeth remained stationed there until 17 February 1936 when her mooring lines broke during a storm and she drifted to where she now lies in Whale Bone Cove in Stanley Harbour.