The High-Density Sludge (HDS) process is widely used for the treatment of acid mine water as it produces a sludge of high density. The aim of this study was the development of a process where iron in mine water can be removed as magnetite, to assist with rapid settling of sludge. It was concluded that Fe2+ can be removed as Fe3O4 (magnetite) by forming Fe(OH)2 and Fe(OH)3 in the mole ratio of 1:2. Magnetite can form in the absence or presence of gypsum. The settling rate of magnetite-rich sludge is substantially faster than that of ferric hydroxide-rich sludge. It is recommended that further studies be carried out on the separation of magnetite gypsum through magnetic separation.