Blaze Energy has signed an agreement to acquire Kentucky Diversified Fuels (KDP), which has operations in eastern Kentucky, US.

KDP includes the steam coal strip mining company Middle Fork Development Services (MFDS) and a development stage coal-to-liquid company, MXP, as well as a coal feedstock impoundment situated on 24.68 acres of land, with around 2.4 million tonnes of in-place fine refuse reserves.

Blaze also executed an agreement with KDP and BMM-Empire to acquire an additional 43.63 acres, with 15.6 million tonnes of in-place reserves, in a separate transaction.

With annual production in excess of 165,000 tonnes and revenues of $8.6m in FY2013, and projected coal production of 325,000 tonnes and revenues of $16.3m for FY2014, MFDS operates an active coal mining operation in Magoffin county, Kentucky.

MXP intends to use its technology to transform energy trapped in otherwise wasted natural resources, such as the coal fine impoundments acquired by the firm, into transportation fuels and fuel additives.

To purchase its entire production output for distribution to the consumer marketplace, MXP has signed a long-term contract with Tenaska BioFuels.Providing an estimated 50-year feedstock for the MXP proposed plant, the coal refuse reserves known as the Dotson Fork and School House Brach Impoundments are the by-product of the previous coal mining operations of Chisholm Coal and have more than 4.4 million tonnes of recoverable coal reserves.

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The Impoundments were appraised in October 2012 by the engineering firm of Marshall Miller and Associates. They are collectively valued at around $33m, at current market conditions.