In Lower Proterozoic rocks of the Olary Province of South Australia margarite occurs in conjunction with sodic muscovite, pseudomorphing chiastolitic andalusite in graphite-rich schist, and as a pseudomorphic phase in rocks consisting of coarse muscovite together with lesser amounts of chloritoid, sillimanite, staurolite, and corundum. In the latter occurrence the assemblage (muscovite-sillimanite - chloritoid ± staurolite ± corundum) replaces massive andalusite. The margarite and sodic muscovite within the pseudomorphs lack a preferred orientation which suggests that their development was associated with the waning stages of the Palaeozoic Delamerian Orogeny (cf. Glen et al., 1977) which was the last major tectonothermal event in the region.

Within the chiastolitic andalusite pseudo-morphs, equal proportions of margarite and sodic muscovite are separated from the rock matrix by a rim of coarser-grained muscovite, which has developed at the pseudomorph margins. A suggested reaction for the development of margarite is 10Al₂SiO₅+1.7Ca²⁺+1.2K⁺+Na⁺+10H₂O⇄(Ca_1.6Na_0.4)Al₄(Si₄Al₄O₂₀)(OH)_3.6+(K_1.2Na_0.6Ca_0.1)Al₄(Si₆Al₂₀O₂₀)(OH)₄+6Al³⁺+12.4OH⁻.

The excess aluminium and hydroxyl ions from the above reaction leave the pseudomorph system but probably react with free quartz and more K⁺ ions to produce the muscovite fringe. 6SiO₂+2K⁺+6Al³⁺+12OH⁻⇄K₂Al₄(Si₆Al₂O₂₀)(OH)₄+8H⁺.

The above reactions are pertinent only for margarite and sodic muscovite produced by the pseudomorphism of chiastolitic andalusite.

Margarite and sodic muscovite in the muscovite- chloritoid - sillimanite ± staurolite ± corundum rocks replace coarser-grained (up to 1 mm) muscovite, sillimanite, corundum, and chloritoid; staurolite is unaffected. The coarse muscovite of the earlier pseudomorphic assemblage contains 7–16 mole % paragonite in solid solution whereas the sodic muscovite assocated with margarite contains 22–33 mole% paragonite in solid solution. Margarite contains negligible muscovite but substantial (17–26 mole%) paragonite in solid solution. The phases plagioclase and paragonite were not detected in any of the investigated samples. Staurolite has an Mg/(Mg+Fe) value of 0.21 and associated chloritoid a value of 0.20.

It is possible that much of the previously described sericitic alteration of andalusite (cf. D'arcy, 1977) within schists of the north-eastern Willyama Complex (north of Broken Hill) involves the production of margarite.