[5][6][7] Charter owner Hugh McKay Sutherland, unable to attract financing for the risky venture, accepted a bloated contract bid from the Mann and Holt partnership in 1886.

Although construction progress was toward the east of Lake Manitoba, the government preference became a western route, but this policy was omitted from the 1891 legislation.

After Sutherland breached the contract, the partners seized $400,000 in company bonds, but completed only 64 kilometres (40 mi) from the junction at Gross Isle to Oak Point (Shoal Lake).

However, the line failed a federal inspection and no land grants were issued for the project, leaving Manitoba unreimbursed for several years.

[12] Mann acquired control of the HBR charter,[13][14] possibly in full settlement of the outstanding construction claim.

[17][18] The old HBR line was initially to nowhere, and ultimately not part of the final route,[3][8][9] but in 1912, Mackenzie and Mann extended this stub north to Gypsumville.

[20] The former HBR land grants, and a federal guarantee of bonds issued up to $12,000 per mile, were available to extend the LMR line farther northward.

[32] That year, the Government of Canada committed to constructing a line north from The Pas, and in 1910 the Hudson Bay Railway was formed.

Mackenzie and Mann, the successful bidders, bridged the river in 1910–1911, and between 1910 and the start of World War I in 1914, laid steel 538 kilometres (334 mi) to Kettle Rapids (located at present day Gillam).

[33][34][35] The town site was cleared and infrastructure erected from 1912, and the completed rail bed reached there, but resources diverted for the war effort limited the latter project.

Work recommenced,[1][39] but minimal maintenance during the intervening years had left the line in a state of disrepair, limiting safe use to the first 344 kilometres (214 mi).

[3][33] Political interference, financing difficulties, and engineering challenges – caused by the large amount of muskeg and frequent rock outcrops on the Canadian Shield – led to numerous delays.

[43] During World War II, plans to downgrade the line changed when the US military required it to handle 300 cars per day and stationed about 7,000 service personnel at Churchill and along the route.