Elizabeth was nominated for seven Oscars, including Best Picture and Best Actress.
A spokesperson for Working Title -- which produced the historical drama in 1988 -- confirmed that shooting for the sequel will begin in six months.
Trade publication Variety first reported the plan for a sequel that, like Solace, could cost upto $ 60 million.
Golden Age will be Kapur's third British period drama, following the Paramount-Miramax film, The Four Feathers, which turned out to be an artistic and box office flop.
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Michael Hirst, who wrote the Elizabeth script, will work with Kapur on Golden Age as well.
Working Title, once an independent British company, is now owned by Universal Pictures. Its hits include Notting Hill and the Bridget Jones movies.
Solace is being produced by New Line, the maker of Rush Hour and The Lord Of The Rings trilogy.
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Golden Age will unfold, like its predecessor, against the increasing and bloody schism between Protestants and Catholics in England. Tim Bevan who, along with partner Eric Fellner, signed Kapur to direct Elizabeth after seeing his impressive Bandit Queen, describes the new film as a drama about religious tolerance.
In a chat with rediff.com a couple of years ago, Kapur had clearly hoped to make a sequel to Elizabeth. "I am drawn to contemporary films, too," he had said. "But historical films are always more challenging."
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