25 years old Amir-Ali Esmaily, from Lisburn Road in Belfast, is alleged to have committed the offence at a house in Bradley Park in Derry between July 13 and July 18 of this year.

A detective sergeant from the PSNI's major investigation team told the court that the defendant kept the assault rifle and ammunition on behalf of the Real IRA at the Bradley Park house which his family owned.

He described the defendant as someone who was trained in firearms and who had contacts with dissident republicans.

The police witness said he had strong concerns about the defendant being granted any form of bail and said he believed the AK47 rifle was to have been used in Real IRA attacks.

However, Deputy District Judge James McFarland released the defendant on bail of £5,000 plus a surety of £100,000, £40,000 of which had to be deposited in court.

The defendant was also ordered to surrender his Iranian and Irish passports and to reside at his father's Wellington Park home in Belfast until his next court appearance on August 14.