PJ Hogan's Mental is set to shoot mid-year in Australia.
Screen Australia is handing back the rights to 1,200 films to the producers, effective July 1.
The screen legend of films like Strictly Ballroom has been admitted to a Melbourne hospice
Actor Penne Hackforth-Jones, a pillar of Australian films and TV for more than 40 years, died in Melbourne on Saturday from lung cancer, aged 64.