Unmanned aerial vehicle (UAV)-based geophysical surveys are attractive for land mineral exploration and are gradually opening extraordinary opportunities in providing high-resolution definition of geologic structures and for direct targeting of mineral deposits. There are, however, challenges such as electromagnetic noise from the UAV, limited load capacity, and short flight times. If these are overcome, there will be a new era in using UAV-based geophysical systems for mineral exploration and for a number of mining-related purposes. In this study, we have tested the potential of rotary-wing UAV systems, given their flight flexibility and robustness for direct targeting of iron-oxide deposits in central Sweden. A walking-mode high-precision Overhauser magnetometer was reassembled so that it could be lifted by the rotary-wing system. Successful backyard tests were performed, but during the real experiment several issues related to high UAV noise level and extreme magnetic field from the mineralization delayed data acquisition. At the end, within nearly three hours and 10 sorties, approximately 20 km-line total-field magnetic data were collected covering an area of about 2 km2. Flight lines were designed perpendicular to the strike of the mineralization to maximize data sampling. Two distinct mineralized zones, magnetite- and hematite-rich and only 50–100 m apart, are notable in the magnetic data due to the fine sampling spacing provided by the UAV survey. Historical low-altitude (30 m above the ground) fixed-wing aeromagnetic data are available from the study area and are compared with the UAV data. Both data sets are consistent in delineating the mineralization, therefore demonstrating the potential of UAV-based surveys for mineral exploration in geologically and logistically challenging areas.