Mining dilution is one of the most important factors affecting the economy of mining projects. Instead of quantifying dilution in mining studies, it is common to assume a general dilution such as 5 per cent for massive deposits. Dilution increases the operating costs in the plant by increasing the tonnage of material to be milled. It prolongs the mine life by reducing plant’s effective capacity. It also reduces the feed grade. In most cases, lower feed grade means lower plant recovery. Dilution also increases the cut-off grade, which in turn reduces the overall ore utilisation of a mine. In this study has been investigated applying pre-concentration by dry magnetic separation for decreasing of dilution impact on reserve estimation and open pit design in low-grade iron ore mine. Based on the preliminary open pit design and assumption 3 per cent as dilution factor, the mineable ore in life-of-mine (measured + indicated) has been estimated with Fe = 25 per cent, SiO2 = 49.7 per cent. Based on the experimental test work on the ore, by dry low intensity magnetic separation of dry HPGR product grinding circuit, it is possible to remove diluted waste material and liberated gangue before concentrate plant, so that around 34 per cent rejected and Fe grade increase from 25 per cent to 33 per cent and by weight recovery 66 per cent. The results of the test work showed that this methodology could decrease largely the impact of dilution in the feed to the plant. It also slightly effect on the reducing of dilution factor impact for open pit design and optimisation and leads to increase the mineable tonnage in the low-grade magnetite iron ore mine.