A sintered magnet body (RaT1bMcBd) coated with a powder mixture of an intermetallic compound (R1iM1j, R1xT2yM1z, R1iM1jHk), alloy (M1dM2e) or metal (M1) powder and a rare earth (R2) oxide is diffusion treated. The R2 oxide is partially reduced during the diffusion treatment, so a significant amount of R2 can be introduced near interfaces of primary phase grains within the magnet through the passages in the form of grain boundaries. The coercive force is increased while minimizing a decline of remanence.