A medal belonging to legendary naval hero Lord Nelson could fetch as much as £500,000 when it is auctioned next month.

The silver, gold and enamel Breast Star of the Order of the Bath was awarded to Lord Nelson for his role at the Battle of Cape St Vincent in 1797 where, disobeying orders, he left the fleet and attacked and captured two Spanish ships.

Lord Nelson, whose daring victories made him a national hero, was shot dead on the deck of his ship HMS Victory at the Battle of Trafalgar in 1805.

Auctioneer James Morton said: “This is an exceptionally important piece of Nelson memorabilia which is even more remarkable having been rediscovered more than 200 years after the Admiral’s death at the Battle of Trafalgar. We are privileged to have been entrusted with the task of offering it.”

The star was presented to Nelson’s brother after his death and he in turn passed it to his brother’s friend Admiral Sir Richard Keats.

A direct descendent of Sil Richard has put it up for auction.

Mr Morton said: “They knew it was an interesting thing but I don’t think they really knew quite how interesting it was and quite how iconic Lord Nelson still is.

“It’s an incredibly difficult thing to estimate and we have gone rather wider than we usually would do, estimating it at between £300,000 and £500,000.

“For a medal, that is a lot of money. It is more than a Victoria Cross has made at auction but compared to what paintings fetch it is a drop in the ocean.” The star is all the more valuable because many of Lord Nelson’s personal belongings and medals were stolen from an exhibition in Greenwich in 1900.

They have never been seen since and are rumoured to have been melted down.

Mr Morton said: “I prefer to take a more optimistic view. I believe they were stolen to order at the time and they are still around and about and may one day turn up.”

Lord Nelson joined the Royal Navy at the age of 12 and was given command of his first ship more than 20 years later.

He lost his right eye and right arm on active service but rose to be commander-in-chief in the Mediterranean.

The sale, on October 22, will be held at Sotheby’s auction house in central London.