Mineral detection using remote sensing techniques is important since it saves the time and effort of carrying out manual land surveys. In this paper a novel algorithm, which can be used to detect ilmenite using hyperspectral image analysis is discussed. To investigate this task, a hyperspectral image obtained from the Earth Observing-1 (EO-1) satellite's Hyperion sensor was used. In the proposed algorithm, first, principal component analysis (PCA) was used for dimensionality reduction and an Euclidean distancebased method was used to extract the pixels containing soil. Thereafter, lab spectral data of typical ilmenite deposits were considered as the reference and a correlation factor analysis was carried out to determine the soil pixels, which are most likely to contain ilmenite and most unlikely to contain ilmenite. Using these two sets of pixels, a training set was constructed to apply Fisher's discriminant analysis (FDA) in order to separate the dataset into two distinct classes-ilmenite and non-ilmenite. Based on the spectral similarity, each pixel of the image was classified under one of these classes. This paper also introduces a probability-based approach to obtain results that are more accurate. A probability density function was designed considering the spatial distribution of the mineral. Thereafter, classification was done considering the probability measure as well. Lab tests performed on the soil samples collected from the locations, which were detected by the algorithm validate that the algorithm is accurate.