KFx was formed in 1984 to provide energy, environmental and economic solutions to electricity generating and industrial users of coal boilers. It plans to use its trademarked K-Fuel technology to transform sub-bituminous coal and lignite into cleaner energy supplies.

The Denver-based company recorded a loss of $US4.9 million during the quarter, a reflection of higher general and administrative expenses as the company nears production at its 750,000 ton per annum K-Fuel plant and KFx mine project.

During the quarter, KFx entered into an option agreement for long-term coal supply and site lease agreements with Kiewit Mining Group subsidiary Buckskin Mining Company, for the construction and operation of a 4Mtpa K-Fuel plant at the Buckskin mine in the Powder River Basin in Wyoming.

KFx said initial permitting and engineering for the Buckskin Mine site had begun.

Towards the end of the quarter, KFx also secured a deal with Arch Coal subsidiary Thunder Basin Coal Company for long-term, market-based coal supply, a site lease, and operating agreements that provide for the construction and operation of an 8Mtpa K-Fuel plant at Arch's Coal Creek Mine in the Powder River Basin.

The companies also signed 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 deal Arch can also increase its equity interest in KFx.