Exhibit 10.80

ARCH COAL, INC.
   
C. HENRY BESTEN, JR.
Senior Vice President
Strategic Development
       
June 29, 2006
 
VIA FACSIMILE AND OVERNIGHT MAIL
       
KFx, Inc.
55 Madison Street, Suite 500
Denver, Colorado 80206-5810
Attn: William G. Laughlin
 
KFx Plant II, LLC
55 Madison Street, Suite 500
Denver, Colorado 80206-5810
Attn: President
 

Re: Master Agreement, dated as of October 5, 2005, by and between KFx Plant II,
LLC and Arch Coal, Inc.

Gentlemen:

This letter will confirm our agreement with KFx Plant II, LLC, a Delaware
limited liability company (“KFx Plant II”), and KFx, Inc., a Delaware
corporation (“KFx”), to extend certain dates contained in the Master Agreement,
dated as of October 5, 2005, by and between KFx Plant II and Arch Coal, Inc.
(the “Master Agreement”) and the Stock Purchase and Warrant Agreement, dated as
of October 5, 2005, by and between KFx and Arch Coal, Inc. executed in
connection therewith (the “Stock Purchase and Warrant Agreement”) in the manner
set forth herein. Capitalized terms used herein but not otherwise defined shall
have the meanings given those terms in the Master Agreement.

By your acceptance of this letter, the parties agree to extend (i) the Operator
Option Period by replacing the references to July 1, 2006 in Sections 2.1 and
6.1(d) of the Master Agreement with October 1, 2006 and (ii) the term of the
warrant granted by KFx to Arch pursuant to Section 2.1 of the Stock Purchase and
Warrant Agreement by replacing (a) the reference to July 1, 2006 in Section 3.1
of the Stock Purchase and Warrant Agreement and in each of Warrant Nos. 05-1,
05-2, 05-3 and 05-4 (collectively, the “Warrant Certificates”) with October 1,
2006 and (b) the references to August 1, 2006 in Section 3.1 of the Stock
Purchase and Warrant Agreement and in each of the Warrant Certificates with
November 1, 2006.

If you are in agreement with the foregoing, please execute this letter in the
space indicated below.

Sincerely,

/s/ HENRY BESTEN
C. Henry Besten
Senior Vice President - Strategic Development

cc: Steven F. Leer

Accepted and agreed to this 29th day of June, 2006:

KFx, Inc.
 
KFx Plant II, LLC
     
By: /s/ JAMES P. IMBLER
 
By: /s/ JAMES P. IMBLER
Name:   James P. Imbler
 
Name:   James P. Imbler
Title:   SVP Business Development
 
Title:   SVP Business Development

 
A Subsidiary of
   
ARCH COAL, INC.
 
City Place One, Suite 300
St. Louis, Missouri 63141
(312) 994-2700