It's the missing film that captures David Bowie's transition from acoustic to electric star; the emergence of Genesis and Hawkwind; and the musical birth of the Seventies with the rise of glam, prog and heavy rock.

The Atomic Sunrise festival, held at the Roundhouse between 9 and 15 March 1970, was the direct consequence of the murderous events at Altamont the previous December. The Grateful Dead not only pulled out of that gig: they also withdrew from a scheduled appearance at the Roundhouse the following March, which left a week free to mount what was billed as “Seven Nights of Celebration” in a “Living Theatre Environment”.

Three bands were scheduled to play each night, many of them regulars at the Roundhouse's Sunday Implosion gigs, with The Living Theatre – officially the oldest experimental company in the world – moving among the crowd like the counter- cultural equivalent of a flash mob, but with social/political consciousness-raising rather than marketing as the intent. They were the resident artistes at Atomic Sunrise, on a bill that included many names welded firmly to that time: Graham Bond (whose presence deterred the billed but absent Black Sabbath), Brian Auger, Third Ear Band, Fat Mattress, Gypsy. But none of these are what gives the film to be premiered at the Roundhouse on 11 March its cachet. That lies with the unique, thrilling footage of Bowie, Genesis, and Hawkwind at formative stages of their careers. There is nothing else like it on film.

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Bowie had achieved his first big hit in the summer of 1969 but had retreated from the scene, set up Beckenham Arts Lab and moved into a flat with Angie Barnett, later Bowie. Genesis hadn't even signed with Charisma at this point (they would do several weeks later) and there were barely 10 people in the audience to see their set, while Hawkwind had just formed but were already operating at the hard end of the new decade's counterculture, dropping acid and turning up the amps to forge their own mind-blowing, motorik version of space rock.

Just a few weeks before Atomic Sunrise, Bowie had signed up a young guitarist from Hull, Mick Ronson, who was brought down to the capital by Bowie's then-drummer John Cambridge. He took Ronson to Bowie's club gig at the Marquee, and two days later the new band line-up – called The Hype – recorded a Peel Session, and found itself on the bill for Wednesday 11 March with Genesis, who had spent the last six months writing songs at Christmas Cottage in the village of Wotton in Surrey.

Now free of their fellow Charterhouse manager Jonathan King, at Atomic Sunrise Genesis would debut songs that would appear on their second album, Trespass. The film represents the earliest known footage of the band, featuring its original line-up with the guitarist Anthony Phillips and the drummer John Mayhew.

It's also the earliest and only footage of Hawkwind featuring the original bassist John Harrison and the glorious guitar of Huw Lloyd Langton, both of whom, sadly, died last year. This was the Hawkwind before Lemmy, before Stacia, before “Silver Machine”, but with their churning, hypnotic, heavy space rock already in place.

But for many, what will excite most about the film is the unique footage of The Hype, filmed just weeks before Bowie recorded The Man Who Sold the World with their bassist, Tony Visconti, acting as producer. Here, we see the birth of the classic rock'n'roll partnership between Ronson and Bowie, the essential axis that made up the Spiders from Mars, in glorious 16mm vintage colour. Given the media's shock and awe surrounding the release of Bowie's first single in 10 years, “Where Are We Now?”, and the forthcoming exhibition of his costumes at the V&A, the poignancy and vibrancy of this early footage rescued from oblivion is worthy of real celebration.

The film's director-producer, Adrian Everett, first heard of the footage in the late 1970s. Who actually placed the cameras in those communal, countercultural early days is not on record, but the stock was being held against a film-processing bill of several thousand pounds. Everett tracked it for years, until, in 1990, he was told it was to be destroyed unless the bill was paid. He put down the money hours before the film was to be trashed, and with the film and the rights secured, his next task was to see exactly what it contained. He spent the next three days watching 33 hours of rushes.

“It was adding the sound and seeing the film come to life that made me realise how important it is,” he remembers. “Until then I just thought it might be interesting, but now I knew it was amazing. That's why I felt I had to get it out there.”

A deal with a record store owner provided a small budget to begin a first cut, and a chance encounter put him in touch with the original sound man at the gig, who helped him put music to the silent film footage.

“I developed a method of playing and replaying the footage – spotting the start of a song and then looking for clues such as an opening word of the lyric or an instrument.” He was working after-hours in a friend's cutting room, but progress stalled when Everett's backer pulled out during the early 1990s recession. Aside from a few assembled performances, the rushes remained just that, sequestered in boxes for the next 20 years, largely unedited and virtually unseen.

Efforts to secure a broadcast slot on the BBC or on Sky came to nothing, and in the meantime, the original participants were heading for that great gig in the sky. Mick Ronson was the first to go, in 1993. In 2010, when Everett heard of the passing of original Genesis drummer John Mayhew, he determined to get a cut of the film into circulation. “Not only so that people could see it at last,” he says, “but as a sort of tribute to those who had gone, some of them unrewarded and almost unknown.”

Taking time out from editing an hour-long first cut of a film that has travelled with him for more than 30 years, Everett admits that it's “nerve-wracking wondering if people will be pleased with the result”.

“But I can only do the best I can with the resources I have,” he says. “The music and images are amazing, and my plan is to do a book and DVD of the final edit. There are so many strands to this story. It's a great story to tell.”

'Atomic Sunrise' is screened at the Roundhouse, London NW1 (0844 482 8008; roundhouse.org.uk) 11 & 12 March

This article appears in tomorrow's print edition of Radar Magazine