Translation:My friend says that he loves you a lot.
It is very often used as love too. Actually the use of "to love" "amar" is seldom in Spanish everyday language. In addition, you don't use "amar" with, for instance, your mother, or a friend. You only use "querer".
That said, I do believe the use of amar may be more common in some Latin Spanish, but In Spain, if you use "amar", even with your partner, is seen a bit of an exaggeration (although this might be biased by me not being very romantic :P)
In fact, in Italian you have amare, which is basically the same, and to a Spanish listening Italian songs or the like, it sounds quite dramatic and exaggerated.
This is reported speech so you need to adjust as you would in English. A person is identified as ¨mi amigo¨by someone who is speaking directly to you. This friend is male because a single female would have been ¨mi amiga¨.
Now, this friend says ¨le quiero¨ to people around you (I love him / her) but when it is reported to you it has become ¨Mi amigo dice que te quiere mucho.¨, (My friend says that he loves you a lot). I believe that this is who TALCA above is referring to as the one speaking. And as you have seen, though the verb ¨quiere¨could include a singular ¨he, she or you(formal)¨, being identified as ¨mi amigo¨means this person must be a ´he´. Talca is correct.