You've picked a very ambitious goal for your first project.
Some tools that come to mind for almost any modeller: X-Acto knife, with #11 blades and chisel blades, scale rule, razor saw, assortment of needle files, pin vise, with a set of good quality bits, divider (one from an old math set will do - it's useful for transferring dimensions), assorted grades of sandpaper, and a good styrene cement (I use lacquer thinner, which is cheap and works well). Add a couple of brushes for applying the cement, too.
Since the loco that you want to build is narrow gauge, you may be doing some major work on the frame of whatever loco you're starting with. For this, I'd suggest a hacksaw and a couple of mill files, and, to put the narrowed frame back together, a suitably sized tap. You can use a regular drill to make the required holes for splice plates, as long as you choose a suitable screw size. Not absolutely necessary, but handy for some tasks, a variable speed Dremel tool, with some suitably-shaped grinding burrs and also some cut-off discs.
Good luck with your project. I hope that you'll keep us updated on your progress, and of course, don't be afraid to ask for help if you run into any problems.
Wayne