The Manly Daily reported on 4 August 1978 the discovery by Australian Army gunners on exercises at North Head of human remains in a cave. The cave is under an overhanging ledge on the ocean side of the headland, and is not visible from the cliff-top. Inside it, the soldiers discovered two-way radio equipment, a typewriter, a shotgun, a 50-foot length of copper wire which could have been a radio aerial, and the remains of a watch. They also found a Japanese yen. The human bones found did not include a skull. One theory was that they belonged to a World War Two spy, who may have blown his head off with the shotgun; or the skull could have been removed by scavenging wildlife.
Dick Reynolds of Balgowlah told the Daily that he had been stationed at the North Head Fort during the war, and that a mystery prowler was spotted one night. The guards gave chase, but the spy eluded his pursuers in the dark. On another occasion, Dick saw a lamp flashing from the American liner Mariposa, as it steamed out of the Heads, in breach of the tight blackout conditions: it could have been signalling to someone on the cliffs. If there was indeed a Japanese spy on North Head during the war, might he have been involved in the attack on Sydney Harbour by midget submarines on the night of 31 May 1942?
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