Abstract: A furnace housing having a heat exchanger, an exhaust gas flue and an ash collecting bin therein. A burn chamber is provided in the housing with the heat exchanger being oriented in heat exchanging relation to the burn chamber. An inclined conduit extends through a wall in the furnace housing and terminates in the burn chamber. A rotatable shaft is attached to a burn basket having a bottom wall and a perforate side wall and an open top. The end of the conduit in the burn chamber terminates adjacent the open top of the burn basket. A closed housing is connected to an end of the conduit remote from the end in the burn chamber. A fan delivers air to the closed housing and then to the conduit. A pelletized fuel feeding apparatus delivers pelletized fuel from a storage device to the closed housing and then to the burn basket.