Stephen Shane Greenfield has pleaded not guilty to Mr Mullaly's murder and is facing trial in the NSW Supreme Court, which is sitting in the regional city.

Crown prosecutor Giles Tabuteau said a post-mortem examination found Mr Mullaly died after being stabbed.

"It ascertained that he had suffered stab wounds to the centre of the chest," Mr Tabuteau told the jury during his opening address on Wednesday afternoon.

Mr Mullaly lived under the Denison Bridge where his body was found, having set up a "rough" makeshift camp.

Two locals out walking checked in on Mr Mullaly on the morning of Sunday, September 20, and found him lying in his camp.

"(He was) in a semi-foetal position on his side and he has in his left hand bloodied serviettes and he appears to have had wounds to the left eyebrow," Mr Tabuteau said.

The passers-by alerted a police officer who was conducting random breath tests on the nearby highway.

"The indications are he's been dead for some time," the prosecutor said, describing the police officer's observations.

The jury will hear evidence of several final sightings of Mr Mullaly around Bathurst.

Witnesses will tell of seeing him at the bakery, outside a cafe, catching a taxi and walking on the bridge in the days before he was found dead.

A supermarket employee coming home from work saw Mr Mullaly walking on the afternoon of Saturday, September 19, Mr Tabuteau said.

"He noticed on Mr Mullaly's face some grazes and that Mr Mullaly was walking slowly.

"He exchanged a brief greeting: 'How are you, are you OK'?"

"Mr Mullaly mumbled something in reply."

 Mr Tabuteau will continue his opening address on Thursday before Justice Richard Cavanagh.