Saving the schooner initially seemed doubtful. Had the vessel grounded as severely on a more distant beach, it would have certainly proved a total loss. The Kate Kelly, however, was insured for $12,000, and Oswego possessed first-class ship salvage and repair capabilities. Insurance inspector Captain Berriman hired the well-known shipbuilder George Goble (who built the Daniel Lyons) to assist the salvors in removing the vessel from the beach. Goble and his partner, James D. McFarlane, operated one of the best-equipped shipyards on Lake Ontario. Using two powerful tugs, screw-jacks, and other implements, the salvors released Kate Kelly from the beach. On September 30, 1875, the Goble-built tug Alanson Sumner managed to pull the schooner into the harbor, but she sank upon arrival. Three days, three steam pumps, and two canal boats later, the Kate Kelly floated again – this time just long enough to move her to the entrance to the Ontario Dry Dock, home of the Goble and McFarlane yard, where she sank again.

As earlier reports had indicated, the Kate Kelly had sustained substantial damage. The keelson was broken aft of the centerboard trunk, several floor timbers were broken, and the starboard side had so many holes it presented “the appearance of a sieve.”  At first, the insurance appraisers could not agree on an estimated cost for repairs. An early observer predicted more than $6,000, while others suggested that the total bill, including salvage costs, would exceed the $12,000 for which the vessel was insured. Ultimately, Goble and McFarlane installed floor timbers, a new keel, and replanked the starboard side’s entire bottom and some of the port side. They installed some new ceiling planking, pocket pieces on the centerboard trunk, and a new deck. The yard also lengthened her bowsprit and added an additional jib . These additions to her headgear may have been intended to improve her handling. In any case, the vessel had only one more known collision after the yard altered her rig. It is unclear who paid for the Kate Kelly’s repair, but Captain Hayes and his current partners retained their ownership.