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Run this second bucket through the wave table, (or manually through the panning tray). To separate the gold from the remaining ore.
The magnetite is a resource that you can sell for funds or use (in this game) to upgrade various processes in the Blacksmith Shop. Magnetite has many industrial uses (unlike the standard ore 'dirt'). It is used in concrete mixes to make a denser/stronger concrete. It can be magnetized easily & is thus used for magnets, along with many other uses.
Magnetite is usually one of the last items you would see remaining in the gold pan along with the gold itself. Being that magnetite is very dense (heavy), like the gold, it will remain in the pan (riffles), long after all the lighter ore has washed away. Miners would then often use a strong magnet to extract the magnetite from the remaining materials in the gold pan.
The magnetite separator basically automates this process by using very strong magnets to first remove any magnetite from the ore/gold mix, & separating it for you to collect & use as you desire. And being that gold is not magnetic (along with the remaining ore), it is separated from the magnetite. This then makes it even easier to extract the gold in the panning tray or the Wave table, since there is no dense magnetite to fill up the riffles, in either finishing process.