UPDATE 1-Miner Grupo Mexico Q2 net profit near $310 mln

(Recasts with results in dollars, adds background)

MEXICO CITY, July 28 (Reuters) - Mining giant Grupo Mexico (GMEXICOB.MX) posted a second-quarter net profit of nearly $310 million on Wednesday, a jump from a year earlier helped by improved metals prices and production from its recently recovered U.S. mining arm Asarco.

Last year, the company's second quarter profit was almost $239 million.

Grupo Mexico, which mines copper and base metals and also has railroads and a construction business, reported sales of around $1.9 billion, up from $1.08 billion in the same April to June period last year.

The company has proposed a merger between its Southern Copper (SCCO.N)(SPC.LM) mining unit and U.S. copper miner Asarco, which it pulled out of bankruptcy last year after a winning a long court battle.

The combination of the two units would increase savings and give Southern Copper shareholders exposure to Asarco's growth potential, Grupo Mexico said. Asarco, which operates copper mines in Arizona is valued at around $6 billon, the company said.

Grupo Mexico said the operation would ensure the company's place as "one of the world leaders in copper production" and said Southern Copper would benefit from Asarco's additional copper reserves of 8.3 million tonnes and 200,000 tonnes of annual copper production.

Grupo Mexico recently won back control of the largest copper mine in Mexico, Cananea, which was paralyzed by a nearly three-year-long strike. The company retook the mine with the help of federal police earlier this year after a long fight with the union in Mexican courts and is aiming to achieve some copper production from Cananea by the end of this year.

With a $3.8 billion investment over the next 5 years, Grupo Mexico hopes to increase Cananea's annual production by 150 percent to 450,000 tonnes. The uptick in production will come from expansions at the mine to raise copper capacity by 270,000 tonnes. Cananea also will boost its molybdenum output, the company said.

Repairing the mine, which sat idle and was damaged during the strike, will cost $114 million, the company said in its regulatory filing.

The company also reports its financial results in Mexican currency, showing a net profit of 4 billion pesos up from 3.45 billion pesos in the same period a year ago, and revenues of 24 billion pesos compared to 14.6 billion in the second quarter of 2009. ($1 = 12.94 pesos at end June) (Reporting by Mica Rosenberg; editing by Carol Bishopric)