The Chatham (Master Edward A. Anderson) sailed in convoy SG-6F with USCGC Mojave (WPG 47) about 1200 yards ahead.

At 13.48 hours on 27 August 1942 the Chatham was struck by one torpedo from U-517 on the starboard side slightly forward of amidships. The explosion wrecked the ship through five decks, destroyed the boilers and threw them through the deck. The blast damaged the generators, the steering engines and blew up all but two starboard lifeboats next to the stack. The vessel remained on an even trim and sank within 30 minutes in the Belle Isle Strait. On board were ten officers, 96 crewmen, 28 armed guards (the ship was armed with one 4in, one 3in and four 20mm guns) and 428 passengers, mostly construction personnel. Seven crewmen and seven passengers died. The survivors abandoned ship in orderly fashion in twelve lifeboats and nine rafts, many of them rowed ashore. The survivors on the rafts were picked up by USS Bernadou (DD 153), HMCS Trail (K 174) (A/LtCdr G.S. Hall, RCNR) and USCGC Mojave (WPG 47), which picked up alone 293 men. The survivors were landed at Sydney, Argentia and Forteau Bay, Newfoundland.