The exciting import, unbeaten from two starts this campaign, was given 59kg for the Group 3 feature – 2kg more than his trainer expected.
Under the set weights and penalties conditions of Saturday's Group 3 Kingston Town Stakes (2000m) at Royal Randwick, Mugatoo has 56kg.
"But we have decided to run Mugatoo here."
The Australian Bloodstock six-year-old's Newcastle Cup weight is 3kg more than he has been given for the $750,000 The Metropolitan (2400m) at Royal Randwick on October 3. He is also a dominant favorite for that Group 1.
The Newcastle Cup winner becomes exempt from a Metropolitan ballot, but can be penalised.
Kerrin McEvoy, who rode Mugatoo to victory in the Listed Canberra Cup (2000m) in March and at his latest run when successful in the Group 3 Premiers Cup (1900m) at Rosehill Gardens on August 29, partners him again at Newcastle.
Lees, seeking to break a run of minor placings and win his hometown Cup for the first time, could have as many as four starters.
As well as Mugatoo, he intends also accepting in the morning with last year's runner-up Attention Run and Big Duke and will inspect Aliferous before making a decision.
"Attention Run will definitely start, but I won't run Big Duke if the track is too firm," Lees said.
"Aliferous has returned home after being placed at Doomben last Saturday, and appears to be in good order.
"I'll look at her in the morning before making a final decision about accepting."
Mustajeer will dodge the Newcastle Cup and instead go to Randwick on Saturday for the Group 3 Kingston Town Stakes (2000m), where he has 55kg; 6kg less than his Newcastle handicap.
Lees intends accepting with Le Romain (59.5kg), Special Reward (58.5kg), Chief Ironside (57kg) and Miss Fabulass (54kg) for Friday's Group 3 $160,000 Cameron Handicap (1500m) at Newcastle.
However, he will also accept with both Le Romain and Chief Ironside for Saturday's Group 3 Bill Ritchie Handicap (1400m) at Randwick before deciding which way to go with the pair after studying the fields.
Special Reward, who didn't have much luck in the straight when fourth to Wild Planet in the Group 2 Theo Marks Stakes (1300m) at Rosehill Gardens last Saturday, has done well since and will back up in the Cameron, attempting to clinch this year's Newcastle sprint double.
He won the Group 3 Newcastle Newmarket (1400m) in March with 57kg, and now has an extra 1.5kg.
Lees also will have a number of runners in Friday's other Group 3 feature, the $160,000 Tibbie Stakes (1400m) for fillies and mares.
Wandabaa, Stella Sea Sun, Game Of Thorns and Regimental Band will be his acceptors.
Stella Sea Sun was to have been retired to stud a couple of weeks ago, but her second to Desert Lord in a Class 6 Plate (1200m) at Eagle Farm on August 29 temporarily delayed the end of her racing career.
"She deserves the chance to go out winning a black type race," Lees said.