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It's hugely exciting discovery – and a bizarre, unexpected one too. An early Orson Welles film, previously thought lost, has been found in a warehouse in northern Italy. Too Much Johnson, the second film Welles ever created, is a silent movie, a slapstick comedy that has never been shown and was thought to have been destroyed in a fire.

"We may never fully understand the mystery of why it was abandoned. What matters now is that it is safe, and that it will be seen," says Dr Paolo Cherchi Usai, senior curator of motion pictures at the George Eastman House in Rochester, New York, which restored the footage.

The film, says Cherchi Usai, is the "intellectual bridge" between Welles's theatrical and cinematic careers. Not only is it a key to understanding how he transferred between the two disciplines, but it represents the "moment when Welles fell in love with the cinema".

Too Much Johnson, the second film Welles ever worked on, was shot in three parts, and designed to be projected as part of a Mercury theatre production of the same name in 1938. The three sequences were inspired by classic silent comedy – the slapstick farces produced by Mack Sennett's Keystone Studio in particular. The cast of the play all take their respective parts in the movies: Joseph Cotten in the lead role, supported by Mercury regulars Arlene Francis, Howard Smith, Edgar Barrier, Mary Wickes and Welles's first wife, Virginia Nicholson. Welles allegedly appears as a bumbling Keystone Kop figure – but the George Eastman House restorers could not identify him among the crowd. Composer and author Paul Bowles was to provide music for the film, and it's said that future star Judy Holliday can be glimpsed as an extra too.

Despite the Keystone influence, Cherchi Usai says: "From a pictorial standpoint, you can tell this is an Orson Welles film. Some of the compositions are stunningly beautiful." It's a work print, which the restorer describes as akin to sketch of a painting – "a glimpse of what Welles wanted to do", rather than a finished film. Nevertheless, one sequence in the film is reminiscent of Welles's most famous work. "The shot, of hundreds of boxes and containers, strongly reminds me of the final sequence of Citizen Kane, in the warehouse," says Cherchi Usai. "It looks almost like a lighthearted rehearsal for that scene."

Welles shot hours of footage for the project, and edited it himself on a Moviola in a New York hotel room, but for one reason or another was never shown: the Mercury theatre's ceiling was too low to accommodate a projector, say some; others believe the actors demanded more money to play in a film. In any event, the play closed early, after dire previews out of town.

The film wheeze was a characteristically irreverent touch on the part of Welles – a nifty way to liven up the 19th-century play, about a Manhattan playboy who flees to Cuba. Welles's production of Too Much Johnson also cut the text substantially and moved the setting forward to 1910. Frame enlargements released when the discovery was announced show the film to be in fantastic shape, thanks to the restoration, with some striking imagery, particularly impressive for a young film-maker making his first professional movie. The film was shot on location in New York, and one scene shows a slapstick chase through the city streets that Sennett would be proud of; in another, Joseph Cotten balances on the roof of a skyscraper, recalling Harold Lloyd's classic comedy Safety Last!.

The film was put to one side when the play closed, though Welles came across the nitrate print again in the 1960s and was pleasantly surprised by its state: "I screened it and it was in perfect condition, with not a scratch on it. It had a fine quality," he said. "Cotten was magnificent, and I immediately made plans to edit it and send it to Joe as a birthday present." It was thought Welles never got a chance to finish the film, as a fire at his Spanish villa destroyed the print.

But, it turns out, that was not the end of the story. Cut to a shipping warehouse in Pordenone, Italy – a long way from Spain and New York, but coincidentally home to a prestigious silent film festival, Le Giornate del cinema muto. Cherchi Usai, himself a co-founder of the Giornate, describes it as a twist "stranger than fiction". But naturally, it's at this festival that Too Much Johnson will receive its world premiere on 9 October, before being screened in Rochester, New York, the following week. Both showings will feature live commentary by Cherchi Usai, explaining the film as it unspools. The intention is to show the footage exactly as it was found – to be "faithful to history".

Orson Welles, who was born in 1915, was a known silent-cinema enthusiast. The steep camera angles and noirish shadows in many of his most famous films owe a huge debt to the German expressionist silents of the 1920s, for one. In the early 1970s, Welles appeared on US television, brandishing a cigar, to introduce classic Hollywood silents from Intolerance to The Gold Rush in a series called The Silent Years. And Too Much Johnson was not his first silent movie – that was The Hearts of Age (1934), which Welles made with a school friend when he was 19. The Hearts of Age, in contrast with Too Much Johnson, is a surreal, cryptic film, with looming closeups, portentous symbolism and images of Welles daubed in Lon Chaney-esque facepaint.

After the screenings in Pordenone and Rochester, it's hoped the film will be made available to view online. Perhaps one day the play will be restaged with the filmed inserts intact, so we can see Too Much Johnson as the director intended.