Rare Michelangelo will be lost to Britain

It was salvaged from the obscurity of a private scrapbook: a gem left for centuries amid a collection of lesser drawings in an English stately home. But months after being hailed as the most notable discovery of a Michelangelo work in living memory, Study of a Mourning Woman is to be lost to Britain.

With no UK buyer willing to pay its £7.5m price, the hitherto unknown picture by the great Renaissance artist will be sold to the highest bidder. It is expected to end up in the hands of an anonymous overseas buyer.

Wednesday's auction, at Sotheby's in London, will end a nine-month rescue bid which saw the National Galleries of Scotland come close to securing the picture.

The story began when the brown-ink drawing of a stooped figure in a heavy cloak was revealed during a routine insurance valuation at Castle Howard in North Yorkshire last October. Sotheby's fine art expert Julien Stock found it in a scrapbook of otherwise undistinguished Old Master sketches in the library.

Soon after, the 10in by 6in work was identified as a previously undocumented Michelangelo, believed to have been bought by Henry Howard, fourth Earl of Carlisle, in London in 1747.

Comparing the discovery to that of "part of the Holy Grail", Sotheby's delayed auctioning it by six months to give the nation a chance to buy it.

Aware that no British museum north of Oxford holds a Michelangelo, the Scottish galleries began a fund-raising campaign. But despite receiving private backing, the move failed when the Heritage Lottery Fund rejected an application for a £4.1m grant.

Sotheby's has been inundated with enquiries about the drawing and its experts now expect it to go overseas.

A lottery fund spokesman said: "When awarding grants for art acquisitions, the trustees look for the widest possible public benefits. Due to conservation reasons, the opportunities for the public to see the Michelangelo drawing were extremely limited – just one month a year."

A spokeswoman for the National Art Collections Fund said this stance could set a "worrying precedent".