Small deposits of Neoproterozoic ironstone in the New Jersey Highlands are hosted by the Chestnut Hill Formation, a terrestrial sequence of siliciclastic rocks, sparsely preserved felsic and mafic volcanic and tuffaceous rocks, and thin limestone metamorphosed at greenschist-facies conditions. Sediments of the Chestnut Hill Formation were deposited in alluvial, fluvial, and lacustrine environments in a series of fault-bounded subbasins along the Iapetan eastern Laurentian margin. Ironstone occurs mainly in the upper part of the sequence in sandstones, quartzites, fine-grained tuffs, tuffaceous sediments, and carbonate-bearing beds. Ore is massive to banded and contains the assemblage hematite ± magnetite, which is locally associated with tourmaline and Fe silicates + sericite + calcite + chlorite ± quartz. Ironstone alternates with clastic bands, and sedimentary structures in ore bands and clastic bands are consistent with alternating chemical and clastic sedimentation deposited synchronously.

Chestnut Hill rocks exhibit geochemical compositions that are dissimilar to typical sedimentary and volcanic rocks. They display evidence for two stages of post-diagenetic alteration. The first stage involved widespread potassium metasomatism, which produced increased values of K, Ba, and Rb that are not correlated with increased Fe or other hydrothermal elements. The metasomatizing fluid may have been basinal water heated during emplacement of Chestnut Hill volcanic rocks. The second stage produced alteration of Chestnut Hill rocks, and also Mesoproterozoic rocks along the footwall contact of the deposits, by hydrothermal fluids likely from a volcanogenic source.

The ironstone deposits were formed by hydrothermal processes related to extension during formation of continental rift subbasins in the New Jersey Highlands. Iron was sourced from Fe-rich Mesoproterozoic rocks at depth, where it was leached by hydrothermal fluids that migrated upward along extensional faults. Iron and other metals were precipitated in permeable basin sediments and chemically favorable volcanic rocks, as well as precipitated directly as chemical sediment.