Savannah boosts Portugal lithium estimate, shares jump

LONDON, May 2 (Reuters) - Savannah Resources (Stuttgart: AFM.SG - news) on Wednesday announced a more than 50 percent jump in the size of Portuguese lithium resources it says could be the first western European project to come onstream, driving its shares more than 13 percent higher.

Lithium projects are springing up across the globe in response to rising prices and anticipation of an electric vehicle boom, prompting some analysts to warn of a bubble.

Savannah said its latest assessment shows Mina do Barroso in northern Portugal holds 14 million tonnes of hard rock lithium, 52 percent more than previously thought. It said it is aiming to make a development decision by early next year.

Savannah shares were up 13.4 percent at 0742 GMT.

"We believe that Mina do Barroso has the potential to be a key piece of Europe's emerging lithium value chain," CEO David Archer (Oslo: 13072052.OL - news) said.

"Spodumene concentrate (from hard rock lithium) is the dominant lithium product that is traded internationally, and with no current European producer we believe that Portugal could be the first European supplier."

Other projects in Europe include Rio Tinto (Hanover: CRA1.HA - news) 's lithium project in Serbia, which is not expected to start production until the next decade.

Rio Tinto and Savannah also have a joint venture in Mozambique.

Meanwhile, Germany has the Zinnwald project in which Bacanora Minerals (Frankfurt: 1BQ.F - news) has a 50 percent interest.

In Britain, the government has leant support to work to develop lithium from brine springs. (Reporting by Barbara Lewis; editing by Jason Neely)