The separation of iron oxide from banded hematite jasper (BHJ) assaying 47.8% Fe, 25.6% SiO2 and 2.30%Al2O3 using selective magnetic coating was studied. Characterization studies of the low grade ore indicate that besides hematite and goethite, jasper, a microcrystalline form of quartzite, is the major impurity associated with this ore. Beneficiation by conventional magnetic separation technique could yield a magnetic concentrate containing 60.8% Fe with 51% Fe recovery. In order to enhance the recovery of the iron oxide minerals, fine magnetite, colloidal magnetite and oleate colloidal magnetite were used as the coating material. When subjected to magnetic separation, the coated ore produces an iron concentrate containing 60.2% Fe with an enhanced recovery of 56%. The AFM studies indicate that the coagulation of hematite particles with the oleate colloidal magnetite facilitates the higher recovery of iron particles from the low grade BHJ iron ore under appropriate conditions.