Denver-based coal-treatment company KFx Inc. defended its technology Thursday after nervous shareholders sent KFx stock plummeting 18 percent Wednesday, the steepest one-day decline since 1999.
“There’s a lot of misinformation in the market,” KFx chief executive Mark Sexton said.
The shares fell from Tuesday’s close of $14.23 to $11.60 Wednesday after KFx issued a news release discussing positive results of a test burn of its treated coal by Ohio utility FirstEnergy Corp.
But the release failed to disclose what KFx later said were two relatively minor problems regarding excessive coal dust and abnormal coal temperatures during shipment of the “K-Fuel” product to Ohio.
In an amended news release issued Wednesday, KFx added, “Only two issues were reported: First, there was fugitive dust that occurred during the transloading process from rail to barge. Second, a few of the delivered cars exhibited elevated heat content.”
Sexton said in a conference call with analysts Thursday that the two problems weren’t included in the original news release because the issues are minor.
He said the problems can easily be fixed by spraying the coal with dust suppressors and packing rail cars more densely, thus limiting oxygen that can cause coal to oxidize.
Excessive dust and oxidation can lead to spontaneous combustion of coal, although Sexton said there was never a threat in the Ohio shipment.
After the conference call, KFx shares closed Thursday at $11.44, down 16 cents.
KFx’s “K-Fuel” is Wyoming coal treated to remove moisture and pollutants and increase energy content. The company believes the coal could be attractive to Eastern utilities that now pay premium prices for high-energy Eastern coal compared with lower-cost, but lower-energy, Western coal.
Analyst Paul Clegg of New York-based Natexis Bleichroeder said the treated coal appeared to work well in FirstEnergy’s boilers, but he said KFx erred by not including the dust and heat problems in its initial news release.
“I’m sure they wish they would have put it in their first press release,” Clegg said. “Their stock probably would have been flat, at worst.”
Staff writer Steve Raabe can be reached at 303-954-1948 or sraabe@denverpost.com.
