Ore prospecting in the regions under cover has become increasingly significant due to the depletion of open-pit mines and the growing demand for mineral resources. We use a case study of the Sijiaying iron deposit in the eastern Hebei Province, China, to introduce the unmanned aerial vehicle (UAV) aeromagnetic survey as a solution to this challenge. To further enhance the effectiveness of UAV aeromagnetic in ore prospecting in the regions under cover, we develop a new iterative imaging technique based on the Tikhonov regularized downward continuation (TRDC) method. This technique aims to achieve high-resolution imaging results and to improve the identification of weak anomalies. The new method involves obtaining the depth and the magnetic values of the sources using the TRDC at different depths. The magnetic values are then converted into magnetization distribution imaging using a forward calculation in the wavenumber domain. Finally, an iterative cycle calculation is performed to focus on the imaging result and produce the compact magnetization solution. Synthetic models are used to evaluate and compare the new proposed method with the traditional iterative compact depth from extreme point method. The newly proposed method demonstrates higher resolution and better capability in capturing weak information of deeper or smaller sources because it leverages the advantages of downward continuation. Two iterative imaging methods are applied to UAV aeromagnetic data acquired from the Sijiaying iron deposit in the eastern Hebei Province. These methods display the possibility of deep ore body and are consistent with geologic inference. The new method outperforms in describing the weak sources, identifying the trend, and the extension of ore bodies. Based on the results and UAV aeromagnetic data, we recommend that it is necessary to strengthen the verification of weaker anomalies and deep prospecting in Sijiaying, Hebei, China.