Beneficiation is the process of increasing the concentration of a valuable component of an ore.
Native iron particles exist in lunar soil in fairly large quantities. They come from nickel-iron meteorites, which become pulverized upon impact. These iron particles are tiny (fine grained) and well mixed into the fine dust of the lunar regolith. As they are in a metallic state and strongly magnetic, very little processing is needed to separate these metal particles from the regolith.
Iron particles are highly sensitive to a magnetic field, and can be extracted by passing lunar regolith over a rotating magnetic drum. Any particles containing iron would stick to the drum and are scraped off the other side, while the remainder fall through. Only about 2% of the lunar soil would adhere to the drum. A very similar process is currently utilized on earth for extracting iron ore from sand dunes.
The power requirements of this mechanical separation are quite modest. A robotic unit not much bigger than a desk could conceivably roam the lunar surface extracting iron dust from the top 10 centimeters. At a concentration of 1/2% this would yield about a kilogram of iron per square meter or 1,000 tons per km2. This is a very high yield of usable material close to any lunar facility.
Using several passes with magnets of varying strength, the collected dust can be refined to 80% pure elemental nickel-iron with the remainder as various oxides of iron-titanium. This concentrate can then be subjected to hydrogen reduction to reduce the remaining iron oxides to metallic iron, and then carbonyl extraction to separate the nickel and iron from any remaining substances. An extra step could be added to remove cobalt, which would be present in significant quantities after the nickel and iron were removed.
A good discussion of magnetic and electrostatic beneficiation of iron particles can be found on pages 11 to 13 of this pdf: http://www.highfrontier.org/Archive/Jt/Koelle%20PILOT%20PRODUCTION%20at%20the%20MOONBASE%202015.pdf
liquid phase separation
The density of iron is much higher than the rocky dust. Therefore, it is possible that the different particles could be separated by mixing lunar regolith into a suitable liquid, then allowing the rocky dust (mostly Basalt or similar) to float and the iron particles to sink.
density of iron is 7.86 g/cm3
density of basalt is 2.9 g/cm3
Bromine = 3.1028 g/cm3
None identified to date.
(Basalt melts at about 1900 deg F) (Iron melts at 2800 deg F)