Peter Jackson and New Line Cinema have mended their strained relationship. The two were bitterly and publicly fighting over profits from the Lord of the Rings franchise.

On Tuesday, it was announced that Jackson would produce The Hobbit and its sequel, both prequels to the Rings mythology.

Principal photography is expected to begin in 2009 – with films being staggered for a release in 2010 and 2011.

The movies will be shot simultaneously.

Are ya faboys and gurls excited???