Panama's President Ricardo Martinelli told "Hora 25 Ultima Edicion" that the ship had come from Cuba and that it was hiding the illegal cargo in a shipment of sugar.
"The ship brought sugar, after removing the first litter we found military equipment, the captain attempted suicide, and the crew refused to cooperate," Martinelli said.
Martinelli added that he considered the cargo "undeclared weapons of war" and accused North Korea of violating the United Nations resolutions against arms traficking.
"We're going to keep unloading the ship and figure out exactly what was inside," the president told Panamanian television. "You cannot go around shipping undeclared weapons of war through the Panama Canal."
According Hugh Griffiths, an arms trafficking expert at the Stockholm International Peace Research Institute, the Chong Chon Gang had been caught before for trafficking narcotics and small arms ammunition.
Martinelli said Panamanian authorities had been tipped off about the cargo coming inside the ship some days ago. However, authorities were expecting to find a drug shipment.
Panamanian authorities are still searching the the vessel's cargo holds. The 35 North Koreans that were aboard the ship were taken into custody after resisting police efforts to search the vessel.
Neither Cuba or North Korea have issued a response regarding the incident.