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Archaeologists in eastern Newfoundland have unearthed what could be the oldest English coin ever found in Canada.

The rare silver coin - around the size of a US nickel and just smaller than a 10p coin - was discovered at the historic site of Cupids Cove, the first English settlement in the nation.

Known as a Henry VII half groat or two-penny piece, it is believed to have been minted more than 520 years ago.

The coin is expected to go on display at the site in the 2022 tourist season.

"It is incredible to imagine that this coin was minted in England and was lost in Cupids over a hundred years later," said Steve Crocker, the provincial tourism, culture, arts and recreation minister, in a statement on Wednesday.

"It links the story of the early European exploration in the province and the start of English settlement."

A team of archaeologists studied the coin in consultation with a former curator of the Bank of Canada's Currency Museum and determined it had been minted in Canterbury sometime between 1493 and 1499.

Head archaeologist William Gilbert, who has led digs at the site since 1995, hailed the discovery as "a major find".

"Some artefacts are important for what they tell us about a site, while others are important because they spark the imagination. This coin is definitely one of the latter," Mr Gilbert said.

"One can't help but wonder at the journey it made, and how many hands it must have passed through."

In August 1610, a group of English settlers landed at what was then known as Cupers Cove, in Conception Bay, Newfoundland. They were led by a merchant from Bristol by the name of John Guy.

Within years, the colonists had built several structures there, including a fort, sawmill, gristmill and brew house.

In 2001, Mr Gilbert's team uncovered an Elizabethan coin at the same site, which was at the time considered to be the oldest English coin found in Canada.

The newly unearthed half groat is believed to be about 60 years older.