The company believes revenue derived from about 25,000t per annum of vanadium production "would provide material by-product credits to offset already low iron ore opex of US$20 to $24 per tonne".
Production of titanium is also now being considered.
A bankable feasibility study at Taranaki is underway, with the project seen as potentially recovering 5 million tonnes per annum of iron for a minimum of 20 years.
"With concerns around security of vanadium supply from key producing nations China, Russia, Brazil and South Africa, underpinning rising prices, we expect the vanadium potential of Taranaki VTM, along with its green steel low carbon emissions profile, to be of huge interest to end users," Manuka said.
Environmental permitting is believed to be underway.
Manuka acquired the project last year for 180 million shares, or about 37.5% on completion of the transaction.
The vendor included Alan Eggers, the founder of the uranium company Summit Resources that was acquired by Paladin in the 2000s for A$1.2 billion.
Eggers is now an executive director at Manuka, with Denis Karp the executive chairman.
Manuka is a modest silver and gold producer in the Cobar Basin of New South Wales.
In December Manuka raised A$4.1 million in equity at 10.5c per share.
Shares in Manuka were up 1.3% to 7.9c in morning trade, capitalising the company at $40 million.
