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KFX ANNOUNCES PLANS TO BUILD AN 8 MILLION TON PER YEAR K-FUEL™ PLANT TO DELIVER ENHANCED, CLEANER-BURNING COAL
Largest K-Fuel™ Plant to be Located at Arch Coal's Coal Creek, WY Mine
DENVER, October 6, 2005 - KFx Inc. (Amex: KFX) and Arch Coal, Inc. (NYSE: ACI) announced today the signing of a Master Agreement which incorporates long-term, market-based coal supply, site lease, and operating agreements which provide for the construction and operation of an 8 million ton per year (TPY) K-Fuel™ plant ("Plant") located at Arch's Coal Creek Mine in the Powder River Basin (PRB) in Wyoming. The companies also executed a Surface Access and Use Agreement which provides KFx the right to immediately access certain land at Arch's Coal Creek Mine. As part of the transaction, Arch has also entered into a Stock Purchase and Warrant Agreement to increase its current equity interest in KFx and which provides Arch the right to make further equity investments in KFx during the development process.
KFx will be responsible for financing, constructing and operating the Plant. The Plant will be located on a site adjacent to the coal mine pit. Initial permitting and engineering for the site have already begun. KFx intends for the Plant to be in operation by the end of 2008. Arch is currently evaluating the appropriate timing for a potential re-start of the Coal Creek mine, which has been idle since mid-2000.
Steve Leer, President and Chief Executive Officer of Arch Coal, said, "We are pleased to have the opportunity to expand our equity investment in the company and participate in KFx's long-term development. We look forward to working with KFx to commercialize the K-Fuel™ product."
"Today's announcement is a win-win for both companies. It allows Arch to benefit from the development of KFx as a whole, while providing KFx with an excellent site for a major K-Fuel™ facility and providing capital for our current and future growth," commented Mark Sexton, Chief Executive Officer of KFx Inc.
Under the terms of the agreement, Arch will immediately purchase an additional $3,000,000 worth of KFx's common stock and has the right to purchase an additional $7,000,000 worth of KFx's common stock up to the completion of KFx's Fort Union facility. Following the demonstrated success of the Fort Union plant, the coal supply and site agreements become effective for the Coal Creek site. Additionally, Arch has been granted warrants at a predetermined premium to the initial purchase price to buy up to $40,000,000 of KFx stock. These warrants expire upon reaching certain milestones in the development process.
About Arch Coal, Inc.
St. Louis-based Arch Coal is the nation's second largest coal producer, with subsidiary operations in West Virginia, Kentucky, Virginia, Wyoming, Colorado and Utah. Through these operations, Arch Coal provides the fuel for approximately 7% of the electricity generated in the United States.
About KFx Inc.
KFx provides solutions to help coal-burning facilities economically increase energy production while meeting emissions standards. The Company's mission is to deploy its patented K-Fuel™ process to transform abundant U.S. and worldwide reserves of cheaper sub-bituminous coal and lignite into clean, affordable, efficient energy supplies.
Please visit www.kfx.com for more information.
Forward Looking Statements
Statements in this news release that relate to future plans or projected results of KFx or the Company are 'forward-looking statements' within the meaning of Section 27A of the Securities Act of 1933, as amended by the Private Securities Litigation Reform Act of 1995 (the "PSLRA"), and Section 21E of the Securities Exchange Act of 1934, as amended by the PSLRA, and all such statements fall under the 'safe harbor' provisions of the PSLRA. The Company's actual results may vary materially from those described in any 'forward-looking statement' due to, among other possible reasons, the realization of any one or more of the risk factors described in the Company's Annual Report on Form 10-K, or in any of its other filings with the Securities and Exchange Commission, all of which filings any reader of this news release is encouraged to study. Readers of this news release are cautioned not to put undue reliance on forward-looking statements.
Contact:
KFx Inc., Denver, CO
Analyst Contact:
Andreas Vietor, Director of Investor Relations
303-293-2992
or
Brainerd Communicators, Inc., New York, NY
Media Contact:
Michele Clarke/Jill Gumberg
212-986-6667
Arch Coal, Inc., St. Louis, MO Analyst Contact: Deck S. Slone, Vice President, Investor Relations and Public Affairs
(314) 994-2717
Websites: http://www.kfx.com
http://www.archcoal.com
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