Well at least the good news is that they're talking about overnight service from Toronto to Timmins, rather than trying to replace or compete with the existing bus service. That sidesteps the issue that the train would be slower than the current buses (barring unrealistic upgrades), given that the train would run would run a different time of day, and overnight trains basically get an 8-hour "freebie" while passengers sleep anyway.
Toronto to Timmins would make an ideal overnight route from a distance perspective (750 km by rail), the question is whether those relatively low-income northern communities bring a large-enough market for relatively-expensive sleeper tickets. Probably not, I'd say, but there might be a latent market for tourists heading up north. Budget-conscious travellers may still prefer taking a 12h train ride in Economy where they can sleep 8h, than a 10h bus ride during the day. I wonder if introducing airline-style lie-flat business class seats would provide a viable middle ground between economy class and private rooms.
Although it would be politically unattractive, it would make most financial sense to just run express from Washago to Temiskaming Shores, stopping only at the existing North Bay. There's no way it's worth the cost of rebuilding the abandoned stations and then continuing to pay to operate and maintain them, just for one train per day which runs in the middle of the night. Even if the new service did stop in those places, virtually everyone heading to/from those communities would likely continue taking the faster bus which isn't in the middle of the night.
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To cover Toronto-Timmins in 12h, the train only needs to average 63 km/h.