Jordan Mitchell, 26, of Dungog, was represented by criminal defence lawyer Drew Hamilton when he appeared in Newcastle Local Court on Wednesday, February 28 from jail and pleaded guilty to possessing an unauthorised pistol and supplying prohibited drugs.

Other firearm, drug and proceeds of crime charges will be taken into account when Mitchell is ultimately sentenced in Newcastle District Court later in the year.

According to an agreed statement of facts, police spotted Mitchell's BMW sedan leaving a house at Cliftleigh about 12.30pm on May 30 last year.

Police say they had prior dealings with the people at the house and conducted a number of checks on the BMW, revealing Mitchell was the owner and that he was subject to a Firearm Prohibition Order.

An FPO prohibits people from acquiring a gun and gives police broad powers to detain and search any person subject to the order without a search warrant.

After stopping Mitchell and conducting a breath test, police searched the BMW and found a Louis Vuitton satchel bag containing 10 oxycodone tablets and a loaded .22 revolver.

When asked where he got the gun, Mitchell replied: "I was just asked to pick the bag up".

In the boot, police found a bag with $8000 in cash and another 24 oxycodone tablets and in the back seat there was a cooler bag with $10,000 cash and 63 grams of methamphetamine.

Mitchell was arrested, charged and refused bail.

Police said Mitchell's DNA was found on the revolver and on a bag containing methamphetamine.

He will appear in court next month for a sentence date.