Specialist investigators have been brought in after a 19-year-old man was allegedly found with knives and tactical equipment at Honeysuckle.
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Following inquiries, police officers became aware of the existence of a document that had been circulated to a number of public figures and media outlets.
It is not clear what was contained in the document, however NSW Police have reminded media and the public that it is an offence to distribute or disseminate material threatening or inciting violence on the grounds of race, religion, sexual orientation, gender identity or intersex or HIV/AIDS status.
About 12.30pm on Wednesday, police received a concern for welfare report regarding a 19-year-old male.
Newcastle Police District officers then went to a premises on Workshop Way where they arrested the man.
A subsequent search saw police find a number of items which have now been seized.
The man was taken to Newcastle Police Station.
According to police, the 19-year-old is assisting officers and there is no ongoing threat to the community relating to the investigation.
Newcastle police are still looking into the matter and specialist investigators are assisting.
Anyone with information is urged to contact Crime Stoppers on 1800 333 000.