KFx Inc. offers combined energy, environmental and economic solutions to coal-fired power generating facilities and industrial coal users in the U.S and internationally. Its proprietary K-Fuel process uses heat and pressure to physically and chemically transform high moisture, low-Btu PRB coals, such as subbituminous coal and lignite, into a more energy efficient, lower-emission fuel. A co-benefit of the K-Fuel process is the removal of significant amounts of impurities, including mercury, and the reduction of emissions of sulfur dioxide and nitrogen oxides. The principal elements of the company's business strategy are to construct additional K-Fuel facilities thus increasing the production of K-Fuel product, and generate earnings and cash flows. The company intends to construct K-Fuel facilities at coal mine sites to process abundant reserves of cheap subbituminous coal and lignite into K-Fuel products. It is also exploring the potential for integrating the construction of K-Fuel plants at new and existing power generating facilities. The company has substantially completed its 750,000-tons/year K-Fuel plant in Wyoming's Powder River Basin, and have signed agreements for the development of future K-Fuel plants also located in the Powder River Basin. In December 2005, it completed its first two production runs, using feedstock coal with less than 8,000 Btus at the 750,000-tons/year plant. It has also signed a memorandum of understanding with a coal producer to access that mine site location in Louisiana to determine the viability of a K-Fuel plant using lignite at that location. March 6, 2006, KFx entered into a stock-purchase agreement with Keller Group, Inc. to acquire its wholly owned subsidiary, Buckeye Industrial Mining Co. Buckeye's primary business is to mine, process and sell coal to power generating facilities and industrial users. The total purchase price of $37.5 million consists of KFx's Common stock valued at $2.5 million and $35 million in cash. The purchase would provide KFx with established markets, infrastructure, blending facilities, coal supply, and operating cash flow. In 2005, KFx acquired a research and engineering firm focused on thermal process engineering, including the upgrading and processing of coal. KFx plans to develop and operate K-Fuel production plants domestically and internationally, through licensing K-Fuel technology to third parties.
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