Sad news from Middle-Earth (or New Zealand, as they still insist on calling it): Guillermo del Toro will no longer direct The Hobbit.

The Mexican director, who has been in heavy development and prep for the Lord of the Rings prequel for the past couple of years, announced the news in a joint statement with producer Peter Jackson via TheOneRing.net just a short while ago.

“In light of ongoing delays in the setting of a start date for filming “The Hobbit,” I am faced with the hardest decision of my life”, says del Toro. “After nearly two years of living, breathing and designing a world as rich as Tolkien’s Middle Earth, I must, with great regret, take leave from helming these wonderful pictures. I remain grateful to Peter, Fran and Philippa Boyens, New Line and Warner Brothers and to all my crew in New Zealand. I’ve been privileged to work in one of the greatest countries on earth with some of the best people ever in our craft and my life will be forever changed. The blessings have been plenty, but the mounting pressures of conflicting schedules have overwhelmed the time slot originally allocated for the project. Both as a co-writer and as a director, I wish the production nothing but the very best of luck and I will be first in line to see the finished product. I remain an ally to it and its makers, present and future, and fully support a smooth transition to a new director”.

Jackson adds: We feel very sad to see Guillermo leave the Hobbit, but he has kept us fully in the loop and we understand how the protracted development time on these two films, due to reasons beyond anyone’s control – has compromised his commitment to other long term projects. The bottom line is that Guillermo just didn’t feel he could commit six years to living in New Zealand, exclusively making these films, when his original commitment was for three years. Guillermo is one of the most remarkable creative spirits I’ve ever encountered and it has been a complete joy working with him. Guillermo’s strong vision is engrained into the scripts and designs of these two films, which are extremely fortunate to be blessed with his creative DNA”.

The Hobbit seemed to be the big-budget blockbuster del Toro was born to make but, as filming of the two-movie saga kept being pushed back because of the MGM ownership battle (which has effectively placed The Hobbit and Bond 23 in limbo), it became clear that something would have to give on del Toro’s packed dance-card; a card that’s already bulging with movies post-Hobbit, the continuation of his novel series, The Strain, with Chuck Hogan, and the development of his own label, Disney Double Dare You.

And, while we're sure that it was a hard Hobbit to break, in the long run it may be the best move for him. He’ll still be involved with the movies – he’ll continue to co-write the screenplays with Jackson, Fran Walsh and Phillipa Boyens, while his design input will be vital – but this will allow him the time and opportunity to make movies that might be more personal.

So now the search for a new director begins. With, in theory, just a few months until filming begins on the first Hobbit film, will Jackson step into the breach? Will Sam Raimi, who was vying with del Toro for the gig in the first place, ditch the Warcraft movie to play with some real Orcs? Or will someone new come into the reckoning?

Whatever happens, we’re confident that The Hobbit will make it to the big screen, although we wouldn’t be surprised if the release dates got pushed back a bit. It’s just a shame that del Toro – the greatest purveyor of twisted fantasy working in movies today – won’t get a chance to work his dark magic on Middle-Earth.

Still, how about that At The Mountains Of Madness movie now, eh?

To read more of the statement, particularly from Jackson, click here.