In November 1970 future member of the Angels, John Brewster on guitar, banjo, harp, backing vocals and washboard, and his brother Rick on violin, washboard, jug, backing vocals and percussion formed the Moonshine Jug and String Band, an acoustic ensemble, in Adelaide. Fellow members were Craig Holden on guitar, Bob Petchell on banjo and harp, and Pete Thorpe on tea chest bass, bass guitar, wash tub and backing vocals. In 1971 they were joined by Belfast-born immigrant, Bernard "Doc" Neeson, on guitar and lead vocals (ex-the Innocents), an arts student and former army sergeant, who already performed locally as Doc Talbot. The folk band gigged at local university campuses and cafes.Holden left in 1972.

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In 1973 Spencer Tregloan joined Moonshine Jug and String Band on banjo, kazoo, jug, tuba and backing vocals. They released their debut four-track extended play, Keep You on the Move, which made the top 5 in Adelaide. It contained a cover version of Canned Heat's "On the Road Again" and three original tracks: one written by John, one by John and Rick, and one by Neeson. It was followed in 1974 by a single, "That's All Right with Me". Both releases were on the Sphere Organisation label owned by John Woodruff, who later became the Angels' talent manager for two decades.

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In mid-1974 Moonshine Jug and String Band changed their name to the Keystone Angels, with the line up of John Brewster on lead vocals and bass guitar, Rick on guitar, Neeson on bass guitar and vocals, Peter Christopolous (a.k.a. Charlie King) on drums and Laurie Lever on keyboards. They had switched to electric instruments and began playing 1950s rock and roll on the pub circuit. Rick later recalled "There was a cult following with The Jug Band but if we wanted any real success we had to start an electric band. So we threw ourselves in the deep end. I went from playing washboard to playing lead guitar. I hadn't even played an electric guitar before then!"

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During July and August 1974 they ran a series of ads in Go-Set, the national teen pop music magazine, announcing that "The Keystone Angels are coming". Lever left during that year. In January 1975 the remaining members performed, as a four-piece, at the Sunbury Pop Festival, then they supported AC/DC during a South Australian tour, and later that year they were the backing band for Chuck Berry.The Keystone Angels issued a sole single, "Keep on Dancin'", on Sphere during that year.