Seems like you do not have imagemagick installed.
Depending on your distro, it should be either sudo yum install ImageMagick ImageMagick-devel
or sudo apt-get install imagemagick
.
You can test it whether it installed successfully by issuing the commands convert
or identify
.
However, the documentation recommends that your precompile on your own local machine, not on the remote server. Meaning, you issue bundle exec rake assets:precompile
on your own machine first. That would avoid having to precompile on the remote server.