The heritage line owns the trackbed as far as the industrial estate at Louth – a distance of five miles.
The plan is to extend the line in stages, with the first target being the three-quarters-of-a mile to the Pear Tree Lane road crossing.
Lincolnshire Wolds Railway spokesman, Phil Eldridge, told the Leader: “Work has just been completed on building a new siding to accommodate rolling stock. We will soon be in a position to start the all-important ground works in preparation for laying the track on the first stage of the extension to Pear Tree Lane.
“Building the new line will be very expensive.
“We now need to start purchasing materials such as ballast, rails and sleepers, which will cost nearly £200,000 for this section.
“So far, nearly £21,000 has been donated thanks to the generosity of the public, but as you can see we still have a long way to go!”.
Mr Eldridge added: “One issue is cost, the other is manpower.
“The LWR is run entirely by volunteers and we always need more help to run the railway, so I would also put out an appeal for more volunteers (particularly younger people) to come and help us with the project.”
• To find out more or support the project, call 01507 363881 or visit www.lincolnshirewoldsrailway.co.uk.