Why the Phoslock share price rocketed 22% higher today

The Phoslock Environmental Technologies Ltd (ASX:PET) share price has been on fire today. Here's why…

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The Phoslock Environmental Technologies Ltd (ASX: PET) share price has been a strong performer on Thursday.

The environmental technologies company's shares raced a sizeable 22% higher to a 52-week high of 55 cents this morning.

Why did the Phoslock share price race higher?

Investors have been scrambling to get hold of the company's shares today after it provided the results from the trial application of a heavily polluted lake in South West China.

According to the release, its trial resulted in a 75% reduction of phosphorus over the first four days of the application. The results also demonstrated to government authorities that Phoslock was simple to apply and the application had no effect on fish, plant life, or humans.

As a result of the trial results, the company revealed that an initial order of ~$1 million worth of Phoslock is currently being applied to a section of the lake.

Chinese authorities will review the results in early June, when it is anticipated that approval will be given to apply similar monthly dosages thereafter. This lake is 34 square kilometres in area, which is approximately two-thirds the size of Sydney Harbour.

If successful the company could see an increase in demand in the area. The release explains that there are nine very large lakes in the area, comprising the South West China Lakes Project Area.

All these lakes have major water pollution problems and both the Provincial and Central Chinese governments are urgently seeking to restore the water quality to boost tourism and economic development.

The company's chairman, Laurence Freedman AM, appeared delighted with the results.

He said: "This is another milestone in the developing growth of Phoslock the material and PET the Company. These lakes are so large that they cannot be treated in a single application. Therefore, we will apply Phoslock progressively, which is likely to take some years."

He added: "This is the first application of the first lake in this area, at a current rate of application of about $1 million per month. This rate could change and so could the number of lakes treated, not only in this particular area, but across China – and Internationally. Thus we are anticipating a growing monthly income from these very large water bodies, independent of all other sources of income."

Other small cap shares that have been charging higher today include gas flow monitoring and control technology platform provider Pivotal Systems Corp Inc (ASX: PVS) with a 6% gain and healthcare company Medical Developments International Ltd (ASX: MVP) which is also up 6%.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Medical Developments International Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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