LIMA, Jan 10 (Reuters) - Canadian miner American Lithium said on Wednesday that the estimated value of its Falchani lithium project in Peru had tripled from the previous forecast to $5.11 billion and that it would have a potential operating life of 32 years.

Demand for lithium, a key metal used in rechargeable batteries for electric vehicles and other electronics, has soared in recent years.

Shares in American Lithium were up more than 5% mid-morning after the company raised the after-tax value of the Falchani project from the $1.5 billion estimated in 2019 on the current price of high-purity lithium carbonate.

The project, located in southern Peru near the border with Bolivia, is awaiting government approval of an early environmental permit study, which could fast track construction permits.

American Lithium last year quadrupled its deposit estimate at Falchani to 5.53 million metric tons of lithium carbonate equivalent following new drilling at the project.

It is the only lithium project underway in Peru, which neighbors the so-called "lithium triangle" of Chile, Argentina and Bolivia, which all hold significant deposits of the white metal.

Peru is also the second-largest copper producer in the world.

Falchani could also produce potash sulfate and cesium sulfate byproducts alongside lithium carbonate, which would bring the project's after-tax value to $5.58 billion, American Lithium said.

The preliminary economic assessment demonstrates "the existing potential for high annual production and long mine-life at Falchani," CEO Simon Clarke said in a statement. (Reporting by Marco Aquino; Writing by Kylie Madry, editing by Emelia Sithole-Matarise)