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Variety says McTiernan has been interested in the project for some months but had been embroiled in protracted plans to get the Sharon Stone-starring "Basic Instinct" sequel back on the rails.
McTiernan had proposed Benjamin Bratt as Stone's co-star. Reports had suggested Stone rejected the plan at the 11th hour, and McTiernan exited the project.
"Smoke And Mirrors" is based on the true 19th century story of magician Jean Robert Houdin, who was sent by the French authorities, with his young female assistant, to Algeria to expose a shaman whose alleged powers were being used to stir up anti-colonial sentiment, the report said.
The film has been on the boards since 1993. Both Mel Gibson and Sean Connery have been interested at various times.
Variety said Paul Verhoeven, who directed the original "Basic Instinct," is now being courted to helm the sequel, although he reportedly rejected the first offer.