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Beneficiation of a rare earth element (REE) ore from heavy mineral (HM) sands by particle size classification in conjunction with high-intensity magnetic separation (HIMS) was investigated. The HM sands of Nea Peramos, Kavala, Northern Greece, contain high concentrations of REE accommodated mainly in silicate minerals, such as allanite. However, the potential of the Northern Greek placer for REE exploitation has not been fully evaluated due to limited on-shore and off-shore exploration drilling data. Characterization of the magnetic separation fractions using XRD and bulk ICP-MS chemical analysis showed that the magnetic products at high intensities were strongly enriched in the light REE (LREE), relative to the non-magnetic fraction. Allanite and titanite are the major host mineral for REE in the magnetic products but mainly allanite controls the REE budget due its high concentration in LREE. SEM/EDS and ICP-MS analysis of the different particle size fractions showed LREE enrichment in the fractions −0.425 + 0.212 mm, and a maximum enrichment in the −0.425 + 0.300 mm. The maximum enrichment is achieved after magnetic separation of the particle size fractions. Mass balance calculations showed that the maximum REE recovery is achieved after magnetic separation of each particle size fraction separately, i.e., 92 wt.% La, 91 wt.% Ce, and 87 wt.% Nd. This new information can contribute to the optimization of beneficiation process to be applied for REE recovery from HM black sands.