Carbonxt (ASX:CG1) share price rockets 10% following significant purchase orders

The company's shares are storming higher on Tuesday…

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The Carbonxt Group Ltd (ASX: CG1) share price reached a fresh new 52-week high today on the back of a positive release from the company.

During afternoon trade, the activated carbon (AC) producer's shares are fetching for 31.5 cents, up 10.53%. At one point, its shares touched a year high of 34 cents, before some profit-taking occurred.

What's driving Carbonxt shares higher?

Investors are buying up Carbonxt shares after the company announced it has secured new powdered activated carbon (PAC) orders.

Worth $5 million annually, this represents close to double of the current value of the PAC orders on hand to $11 million. Carbonxt gained new customers in the power generation, waste-to-energy and cement manufacturing sectors.

The majority of these contracts are expected to commence at the beginning of the new calendar year. Forecast gross margin as a result of the bumper revenue is expected to be about 40%.

Each of the contracts is valid for 12 months, with extension rights to three years providing PAC meets client specification targets.

In addition, two of Carbonxt's existing customers extended their PAC agreements for a further 2 years until 31 December 2023.

The company noted that demand for its products continues to grow as business activity rebounds in the United States. It also said that customers are preferring to sign domestic supply agreements given current global supply chain challenges.

Carbonxt managing director, Warren Murphy commented:

We continue to strengthen our position in the PAC market with these new customer contracts and we have been opportunistic in securing agreements on favourable terms. While annual PAC revenue continues to track up, our focus is on aggressively scaling up new and existing orders for our AC Pellets.

We have a major market advantage here and we are witnessing demand from a number of new sectors that recognise that our technology can cost effectively and successfully reduce emissions and remove harmful toxins from the environment.

About the Carbonxt share price

Over the last 12 months, Carbonxt shares have accelerated by almost 80%, reflecting upbeat investment sentiment. When looking at year-to-date, its shares are further up by around 90%.

Based on today's price, Carbonxt has a market capitalisation of around $54.2 million, and approximately 169.39 million shares on issue.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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