As it turns out, The Last Exorcism actually wasn’t the last.

Which is probably bad news for the film’s protagonist, Nell, but good news for Toronto’s Ed Gass-Donnelly, who is set to direct the film’s sequel, The Last Exorcism 2.

This project will see Gass-Donnelly take on the next chapter in the franchise, which is said to be set three months after the last film left off, and will hit theatres either the end of 2012 or early 2013. The film will be produced by the same team that did the first, Strike Entertainment and Eli Roth’s Arcade Pictures.

Doing more than just scaring audiences, The Last Exorcism shocked many when it grossed $70 million worldwide on a budget of $1.5 million.

Gass-Donnelly became attached to the sequel in November, after being contacted by a Strike executive who had seen his 2010 film, Small Town Murder Songs.

In a meeting, one of the Strike execs asked how he’d feel “hypothetically” about doing a sequel.

Not initially keen on the idea, he decided to commit after a rapid-fire script reading – he was given the script on a Wednesday and decided by Friday to come on board – and feeling like he could stretch his legs creatively within the genre.

“Even though I’m not actually a fan of horror movies, I really liked that first film,” he explains.

“Nothing scary officially happens for the first 40 minutes, but you know bad things are going to happen, so it’s that sense of dread and fear, a much stronger sense of unease,” he says of his attraction to the psychological aspects of the project.

“If there’s strong [material], you can take your time and create a sense of dread and build, as opposed to firing a bunch of blood out of a cannon,” he adds.

He relates the sense of dread to another box office hit – Paranormal Activity 3 – which, by coincidence, he saw the day after he read the script for The Last Exorcism 2.

The box office may be a scary place for many in the industry right now, but genre is one of the few places delivering consistent audiences – thanks to the loyalty of fans.

“When you deliver something that’s actually good, [that audience] is probably one of the most supportive audiences, as opposed to drama – straight drama is one of the hardest things to sell from a business perspective, creative discussions aside.”

Casting and crewing will start this week – Ashley Bell is set to reprise her role as Nell – and production is slated to begin later this month in New Orleans.