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Plaman Resources, which owns the internationally significant fossil site near Middlemarch, was placed into voluntary receivership on Tuesday.
Its application to the Overseas Investment Office to buy a 430ha neighbouring farm is now on hold.
Plaman's shareholders, Malaysian company Iris Corporation and little-known Burleigh Nominees, in the Isle of Man, placed the company in voluntary receivership and liquidation.
News of the receivership was celebrated by those who have opposed the mining plans and campaigned to save the maar.
Their attention was now turning to how the site could be saved from future mining.
One of the leading voices against the proposal, University of Otago geologist Prof Daphne Lee, was elated when she heard the news.
''I'm extremely relieved because it has given me a lot of sleepless nights.''
Securing the land in public ownership should now be a priority, Prof Lee said.
''To placate the mining companies I've had to keep this totally important and amazing site out of sight from the general public, which I was very regretful about. But now I think things have changed completely and now we can celebrate having such an amazing site in Dunedin's backyard.''
Middlemarch residents Shane Loader and Andrea Bossard had been fighting the proposal for more than a year and said the receivership news meant their lives could return to normal.
''I always felt their enterprise wasn't really viable and I suppose the longer we put up our fight and dragged it out, the more difficult it was going to be for them,'' Mr Loader said.
Plaman's exit was the beginning of the next stage towards protecting the maar and the fossil record found within it, Ms Bossard said.
''The question now becomes how do we get it into public ownership and how do we make sure no mining ever happens again,'' she said.
After initially writing a letter of support, the Dunedin City Council last week formally opposed the proposal and adopted a resolution recognising the significance of the maar and supporting its preservation.
Dunedin Mayor Dave Cull said the council's focus remained on finding a way to protect the maar and staff were working on a report.
In May last year the company applied to the OIO to buy the surrounding farm, which would allow it to establish a diatomite mine and extract up to 500,000 tonnes of the dry mineral each year.
But the plan has faced considerable opposition, particularly after a confidential report by the investment bank Goldman Sachs was leaked to the Otago Daily Times.
A petition to save the site from mining has gathered more than 10,000 signatures.
When contacted, the OIO said it was aware of the situation and said as the company's circumstances had changed its application was now on hold.
Plaman's financial position was still relevant to the application's assessment and the OIO would continue to accept third party submissions.
Receiver Neale Jackson said as a result of the issues surrounding Plaman's application and the time it had taken, the company had encountered funding difficulties and its directors asked for receivers to be appointed.
Mr Jackson said the receivers were assessing options for the company and its assets.
Plaman's only known debt was $US20million ($30.6million) to Goldman Sachs, which lent it the money on a two-year term. It is due to be repaid in May next year.
-A public meeting on the future of Foulden Maar, organised by the Save Foulden Maar campaign, will be held at the Otago Museum next Tuesday at 7pm.
-Additionally reported by Tim Miller