The trackage acquired from the WR&CC was built to the low standards of a bush tramway, unsatisfactory as a permanent line. It could not even be appropriately extended into Ohai, though in 1919 an extension of 1 5/8 miles was opened to serve mines in the locality of Mossbank. In 1918 a proposal to build a third line directly from Wairio to Ohai was made, and it included a small deviation through Morley Village, considered part of Nightcaps. The construction of the line was opposed by the Nightcaps Coal Company, but after two commissions were held, approval was granted and construction commenced in July 1919. The first section was opened for traffic to Tinkers on 1 September 1920, but due to difficulties with the terrain it was not completed to Ohai until December 1924 and opened to traffic in the new year. In 1934 the line reached its ultimate terminus of Birchwood, 19 kilometres from Wairio. As the railway was built to national standards, the Ohai Railway Board suggested that the government could acquire it as the start of a route northwards to Lakes Te Anau and Manapouri, but nothing came of this.