Red-mud, the residue generated from the Bayers processing of bauxite ore in Jamaica was subjected to a low temperature reduction process. Hematite (~60 m%) was reduced to magnetite employing a gas based mixture of CO, CO2 and N2 as a diluent. Extensive thermodynamic study was conducted to identify the stability region for magnetite. ‘Optimal conditions’ for the gas-phase reduction were determined to be: a processing temperature of 540oC ± 10C , partial pressures CO(g) and CO2(g) each of 0.070atm (bar) ± 0.001atm.(bar)/ inert diluent-gas: N2(g), for a conversion-time of 30min. Frantz dry and Davis tube magnetic classification was tried on the magnetite product. The magnetic separation tests were not successful in achieving a high grade of magnetite in the magnetic fraction. This finding was subsequently attributed to the discovery, via STEM imaging, of nanometer length-scales associated with the nascent crystallites of the entities, which are intrinsic to Bayer-Process precipitate.