Savannah boosts Portugal lithium estimate, shares rise

* Could lead European production

* Analysts see ‘strategic importance’ in European lithium

LONDON, Sept 10 (Reuters) - Savannah Resources said on Monday its Portuguese lithium resources were more than 40 percent larger than previously estimated and it was talking to potential European customers as the continent seeks to reduce battery mineral imports.

Lithium projects are springing up across the globe in response to an expected electric vehicle boom, but warnings of a bubble led to stock shorting this year, unravelling some of the previous strong rallies.

Savannah’s share price has gained around 30 percent this year and rose as much as 14 percent on Monday, before paring gains.

Monday’s 44 percent upwards revision, taking the size of Savannah’s project in northern Portugal to more than 20 million tonnes, is the third mineral upgrade this year and further revisions are likely as drilling continues, the company said.

Savannah said it was on track to complete a feasibility study early next year and aimed to be producing lithium by 2020.

“There is no significant European production of lithium at the moment. This (Savannah’s project) appears to have the best credentials to be a meaningful producer in Europe,” CEO David Archer said in a telephone interview.

Earlier this month, the London-listed company announced a secondary listing in Frankfurt, and Archer said on Monday he was in contact with potential European as well as Asian customers for Savannah’s lithium. He did not name them.

The Portuguese project, named Mina do Barroso, will produce spodumene concentrate from hard-rock lithium, which can be relatively quick to produce, although those investing in the brine fields of South America say their approach can be cheaper.

Other projects in Europe include Rio Tinto’s lithium one in Serbia, which is not expected to start production until the next decade.

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

Simon Moores, managing director at Benchmark Mineral Intelligence, which collects and analyses data on battery minerals, said the principle of Europe having its own lithium mines was “strategically important”.

His company predicts Europe will have a fifth of global electric vehicle lithium ion battery production in 10 years’ time, compared with China’s 54 percent of North America’s 15 percent, but so far Europe relies on China and the Americas for its lithium supplies. (Reporting by Barbara Lewis; Editing by Mark Potter)