Nickel (Ni) is a critical metal facing a sharp increase in demand as it is a key ingredient in clean energy technologies such as lithium-ion batteries (LIBs) for electric vehicles (EVs). The gradual depletion in the active high-grade Ni sulfide deposits has garnered more attention toward Ni extraction from low-grade ultramafic Ni sulfides. Although the low-grade ultramafic sulfide deposits have the benefits of being amenable to surface mining and low sulfur content, which translates to fewer sulfur emissions, their high MgO content raises the slag liquidus temperature and viscosity pushing the need for higher smelting temperatures. Our previous work developed a novel 2-stage thermal treatment process for extracting nickel from low-grade ultramafic nickel concentrates. Although promising results were obtained, further work was required to understand and fully optimize the separation process of the magnetic FeNi alloy from the non-magnetic gangue. Thus, this study comprehensively assesses the feasibility and conditions needed for producing high-grade ferronickel products. An efficient magnetic separation process flowchart detailing the optimum conditions for each process stage was developed. The optimal conditions were grinding the thermal treatment product to below 38 μm followed by magnetic separation using a magnetic field intensity of 0.025T. Under these conditions, the nickel recovery reached 80 %, the nickel grade was 26 %, and the Ni separation efficiency was above 65 %, within the acceptable ranges. Lastly, the study systematically investigated the phase transformations, micromorphology, and Ni distribution in the alloy, magnetic concentrate, and tails, aiming to fully understand the effect of variable factors such as particle size of the ground product and magnetic field intensity.