The long-awaited sequel to the 1980 cult classic Hawk the Slayer is moving ever forward with the announcement that director Terry Marcel has formed a deal with Rebellion, the leading games developer and publisher.

Rebellion CEO Jason Kingsley OBE and director Chris Kingsley will act as producers on Hawk the Hunter, which will part-fund through Kickstarter in the coming months. They have also acquired the games and publishing rights to Hawk the Slayer.

Of the deal, filmmaker Terry Marcel said: “This is a dream come true, I’m delighted to be working with a true fan of sword-and-sorcery whose talent means the possibilities for Hawk are endless – keep watching Hawk fans!” Jason added, “Hawk the Slayer was important to me as a boy, and has remained an important touchstone for me now as an adult. It blazed a shining path of true sword and sorcery movie magic for others to follow. I am delighted, and slightly awed, to be part of the team helping to create more adventures for Hawk and his friends.”

The Kickstarter campaign will be launched at a special screening of the new HD restoration of Hawk the Slayer at this year’s Film 4 FrightFest, which takes place in London at the end of August. The Blu-ray of the film is released by Network this Monday, July 6th.

Back in 1980, Terry Marcel kicked off the cinematic sword and sorcery boom that would give us Excalibur, Conan, Dragonslayer and Willow with a low-budget opus called Hawk the Slayer. Shot in six weeks in Buckinghamshire for £600,000, it featured the handsome but wooden John Terry as Hawk, who – with his flying “mindsword” and mismatched allies (witch, elf, dwarf, giant) – sets out to rescue a nun from his own deformed brother Vultan, played by Jack Palance at his scenery-chewing worst. Now, 35 years on, Marcel is finally preparing the follow-up: Hawk the Hunter. It’s not quite the longest a British director has waited to make a sequel to a cult hit, but damned close.

“We have a studio deal and a sales deal,” says Marcel, himself quite elfin at 73. Games company Rebellion has also signed up to produce a Hawk game and a putative range of books or comics, and to provide CGI and funding for the sequel. Rebellion’s co-founder Jason Kingsley described the original Hawk as “a touchstone” of his life and said he was “delighted and slightly awed” to be part of the new venture.

“The budget is $5m – half an episode of Game of Thrones – and we’re short 20%,” says Marcel. “So Andrew [Grocock, co-producer] suggested a Kickstarter campaign.” This will be formally launched after a screening of the original film followed by a director’s Q&A during FrightFest, the horror film festival, in London in August. Marcel hopes to start shooting in November. He also has plans for a TV series, “the third part of the trilogy”, called Hawk the Destroyer, which he reckons could run for five years.

The four-decade Hawk saga is a study in the ups and downs of film-making. Marcel “started as a postboy at Pinewood in 1960” and worked as second unit or assistant director on films including Carry on Cleo, Straw Dogs and the Pink Panther series. But he had helmed only two Ray Cooney farces before Hawk, which he wrote during a family holiday in Spain. The script – later revised by his collaborator on the Cooney farces, composer Harry Robertson, who also supplies Hawk’s bizarre disco-synth score – seemingly owes a debt to the first Star Wars film of 1977. Apart from its story arc, Vultan wears a black helmet and answers to a wizard in the Emperor mould.

“No,” says Marcel emphatically. “Harry and I both loved sci-fi and fantasy: Harry Harrison novels, the Conan books, all the greats. I also loved Kurosawa’s Yojimbo, which had already been remade as A Fistful of Dollars. One day I said to Harry, ‘I want to remake A Fistful of Dollars with a medieval knight in England.’” Flecked with a bit of Force-style magic, the script was commercial enough to attract backing from a subsidiary of Lew Grade’s ITC Productions. Marcel and Robertson chose to shoot it themselves on a low budget rather than yield control. The two flew to LA to approach Jack Palance directly: they’d loved him in Shane.

“He wanted to come to England, he thought he could do something with the part, he liked the fun of it,” says Marcel. “I believe he got $100,000. He stayed in a small hotel in Soho, but on the set he shared a caravan with everyone else. There were no airs about the man, though he put me to the test at times – asking me what Vultan’s motivation was for adopting two children and so on.”

The finished film evokes both derision and devotion. Apart from Terry (who had been a carpenter) and Palance, it has an extraordinary cast: Patricia “Rocky Horror” Quinn, Harry Andrews, Warren Clarke, Roy Kinnear, Annette Crosbie, Cheryl Campbell. Marcel readily admits the fights are sketchy and the dialogue between the giant (Bernard Bresslaw, 6ft 7in) and the dwarf (Peter O’Farrell, 5ft 6in) is “cheesy” but Hawk was meant for a family audience. He does wish he’d had more to spend on effects, though: “Most of the flying-sword sequences involved me throwing it to the actor.”

Hawk “did good numbers” in the UK but ITC collapsed before the US release. Marcel and Robertson shelved the planned sequel, worked together on two more features, then split. Most of Marcel’s career since 1987 has been in TV: The Bill, Heartbeat, The New Adventures of Robin Hood. “I thought after Hawk I would get bigger offers, but I didn’t,” he says. “I’m not sore. I pootled along.” For the last 10 years, he’s been incubating sci-fi or fantasy TV series, and concerning himself with his children’s careers. Rosie Marcel plays Jac Naylor in Holby City, Kelly Marcel wrote the TV series Terra Nova for Steven Spielberg and scripted 50 Shades of Grey, and Luke Marcel is a special-effects technician. “I can’t afford him,” says the proud dad.

Harry Robertson died in 1996 and Jack Palance in 2006. John Terry went on to appear in Lost (as Jack’s dad) but still gets asked to sign Hawk memorabilia at sci-fi conventions. Because Hawk wouldn’t die. “It still sells well globally,” says Grocock. “Scandinavian countries, America, South America. It’s big in Japan, South Africa. You still get cheques from Germany, Terry.” Marcel adds cheerfully: “Yes, about £12.65 last time I looked. I’ve never made any money from it.”

Fans would get in touch asking if he’d agree to novelisation, if they could buy the mindsword. Grocock’s theory is that Hawk touched a chord, coming at the end of the austere 1970s and the start of a brave new 1980s world of Atari computers, VHS recorders and Dungeons and Dragons role-playing games. Famous nerds who grew up at that time seem to bear this out. “Bill Bailey is a huge fan, Simon Pegg is a massive fan,” says Grocock. Another fan, rock wizard Rick Wakeman, has apparently agreed to write the music for the sequel.

So Marcel was persuaded to map out a whole new mythic architecture for Hawk. The sequel, if it is made, will see the slain Vultan reanimated without a soul and looking for an evil sword to counter Hawk’s weapon. There will be a couple of female additions to Hawk’s crew instead of just nuns and witches, and a new cast of unknowns to play Hawk, Vultan et al. Ray Charleson, who played Crow the elf in the original, has agreed to take a small part opposite his replacement, in what Grocock refers to as “a poor man’s version” of the Spock-meets-Spock moment in the Star Trek franchise.

Marcel promises better fights, better effects, but a tone that is ripely familiar. “At the end people will come out and say, ‘Lovely movie. A bit cheesy…’ And I will be delighted.”