K-Direct

1. K-Direct

2. Presentation Contents • The K-Fuel Process • K-Fuel Benefits • KFx Production Facility • Typical K-Direct and power plant configuration • Projected CO2 emission reduction • Typical Plant Performance Improvement

3. What is K-Direct • K-Direct is the location of a K-Fuel refinery at a coal fired power plant site. • The K-Direct plant refines sub-bituminous coal to low moisture, low Hg , high BTU fuel. • The host power plant supplies the energy and coal handling equipment needed to operate the K-Direct plant.

4. What is the K-FuelTM Process Time Tested Equipment & Proven Process Two deployment strategies One at coal source One at coal user applications

5. Example results of the K-FuelTM process using PRB Coal PRB Coal K-FuelTM “Enabling” Process Heating value(Btu/lb) Moisture content (%) Mercury – Hg(lb/TBtu) Sulfur (lb/MMBtu) CO2 generation (ton /TBtu) 8,000- 8,800 30 ~9 0.9 1,434,000 10,500- 11,500 8-10 2.6 0.7 1,179,000 ~30% ~70% ~70% ~20% ~18%

6. K-FuelTM Process:A Method that Replicates Nature Coal Proven EquipmentBased on 70+ YearsCoal Processing Vent Lock hoppers Vent Steam in Water recycled as steam CarbonFilter Condenser Water for Reuse Process water out Vent Qualified Hg Disposal Site Waste water to treatment Hot Dry Coal Direct To Power Plant K-FuelTM Product Product Cooling To Storage

7. K-FuelTM ProcessTime Tested Equipment & Proven Process 165 Processors Worldwide

8. Pressure & Temp Squeezes out the water Removes pollutants through heat and washing effect Stable Product Reduces equilibrium moisture point Minimal dust Chemically and physically restructures coal as it reduces H2O, S, Hg Permanent lowering of the coal moisture equilibrium point Thermal Evaporation Product ‘popcorns’ Fragile/dusty Reabsorbs H2O Spontaneous Combustion Minimal environmental benefits High Energy Requirement No CO2 Reduction Benefit Only removes H2O Technology Comparison K-Fuel™ Refining vs. Historical Coal Drying

9. Proven Technology • KFx owns 30+ case patents in approximately 40 countries • 5 pilot plants have been constructed and refining process proven successful • Average time to develop a first-of-a-kind technology is 20 yrs; K-Fuel & K-Direct are ready to go! • KFx has invested more than $100 million to commercialize K-Fuel • 1st commercial plant operational and producing K-Fuel

10. Example of a K-Direct plant integrated with a power production facility.

11. Typical K-Direct and Power Plant configuration

12. K-Fuel Benefits • Up to 30% less NOX and SO2 compared to PRB feedstock; and up to 80% less compared to Eastern coals • K-FuelTM has, on average, 70% less mercury than PRB feedstock and up to 90% less than Eastern coals • Reduces CO2 emissions due to non-evaporative water removal and increased boiler efficiency. • Enhancement/alternative to post-combustioncontrol equipment (Significant Equipment Cost Reduction) • Increases boiler efficiency • Reduce O&M costs • No added disposal problems • Handles, transports and stores as well as PRB coal

13. Typical CO2 Emission Reductions Using K-Direct(Based on US EPA CO2 Emission Factors) Example is based on a 600 MWE electric power plant *Meets current RGGI CO2 Reduction Goals

14. Typical Plant performance and financial improvement • This example is based on: • 2 unit 300MW plant • Burning <2% sulfur eastern bituminous coal • Equipped with a dry scrubber • Equipped with a PAC system for Hg control • Model includes all cost associated with operating the K-Direct plant. • The example plant is located on the east coast of the US.

15. http://www.kfx.com