BlueStone Capital Initiates Research Coverage of KFX Inc. with a Long-Term Buy Recommendation.

NEW YORK--(BUSINESS WIRE)--Aug. 21, 1997--Senior Analyst, Scott Baily of BlueStone Capital Partners L.P. initiates coverage of KFX Inc. (AMEX: KFX) with a long-term buy rating, and a 12-18 month price target of $7-$10 per share. KFX Inc., headquartered in Denver, is an industry leader in the design, manufacture, and commercialization of clean fuel beneficiation coal technology that is used to convert low-energy, high moisture coal and other organic feedstocks into high-energy, low moisture solid fuel, known as K-Fuel.

-- After 20 years of R&D and pilot projects, KFX has developed a

patented "clean fuel" process called K-Fuel. The K-Fuel process

transforms low-energy, high-moisture coal into high-energy,

low-moisture premium fuel, which increases the heating value and

efficiency by 50%.

-- KFX's two major strategic alliances, one with Thermo Ecotek

Corp. (TCK), and the other with Kennecott Energy and Coal

Company (KECC) give KFX considerable credibility and the

resources to commercialize its K-Fuel Technology.

-- KFX's first commercial K-Fuel plant began startup operation in

Gillette, Wyoming this past March, and is expected to be in full

operation by the end of 1997. The K-Fuel produced qualifies KFX

for a $25 per ton IRS tax credit until the year 2008.

-- The market opportunities for KFX's K-Fuel product -- both

domestically and internationally -- are diverse and, we believe,

have significant potential.

-- KFX's patent position on its K-Fuel Technology is a major

competitive advantage.

BlueStone Capital Partners L.P. is a full service investment banking and brokerage firm that delivers financial services to emerging growth and medium size companies worldwide. BlueStone Capital assists clients in maximizing their growth by providing sophisticated investment strategies that are designed to achieve clients' strategic, operating and financial goals.

CONTACT: Scott Baily, 212/850-0558