The most suitable producing conditions and degree of densification of sendust (Fe-Si-Al alloy) coated with magnetite powders were investigated from the standpoint of the thermal decomposition. Ferrous formate powders obtained by the precipitation method were used for the coating material of commercial sendust powders. Sendust powders coated with magnetite powders were successfully prepared by pyrolyzing the mixture of fine ferrous formate powders and sendust powders with weight ratio of 1 at 400-1000°C for 1h. The thermal stability of the coated sendust powders under a continued heating at 700-1000°C in a CO2 gas flow was significantly high. The degree of densification of the compacts composed of the coated powders and an additive of excess magnetite was higher than those of the compacts with only coated powder, when fired at 1000°C for 5h.