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Methanex Corporation (MX)
Market: CDN Consolidated
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Nov 27, 2014, 11:49 AM EST
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Methanex Reports Stronger Results in the Fourth Quarter-Egypt Plant Produces First Methanol

VANCOUVER, BRITISH COLUMBIA, Jan. 26, 2011 (Marketwire) --



For the fourth quarter of 2010, Methanex reported Adjusted EBITDA(1) of $71.3 million and net income of $27.9 million ($0.30 per share on a diluted basis). This compares with Adjusted EBITDA(1) of $57.3 million and net income before unusual item of $10.6 million ($0.11 per share on a diluted basis) for the third quarter of 2010. For the year ended December 31, 2010, Methanex reported Adjusted EBITDA(1)of $266.7 million and net income of $101.7 million ($1.09 per share on a diluted basis) and net income before unusual item of $79.5 million ($0.85 per share on a diluted basis). Net income for the third quarter of 2010 and year ended December 31, 2010 includes an after-tax gain of $22.2 million related to the sale of the Company's terminal facilities in Kitimat, Canada.

Bruce Aitken, President and CEO of Methanex, commented, "Methanol prices increased during the fourth quarter and this led to improved cash flow and earnings. We have been disappointed with the lower than expected production in 2010 and our earnings potential is substantially improved when we are able to operate our plants at higher rates. In this regard, I am delighted to report that the Egypt Project produced first methanol last week and that the restart of our plant in Medicine Hat, Alberta is on track for early in the second quarter of 2011. With the addition of these two production sites, we are well positioned to increase our production and earnings capability this year."

Mr. Aitken concluded, "While methanol prices have moderated slightly early in the first quarter of 2011, they are still at strong levels. With US$194 million of cash on hand, no near term refinancing requirements, and an undrawn credit facility, we are well positioned to continue to invest to grow the Company."

A conference call is scheduled for January 27, 2011 at 12:00 noon ET (9:00 am PT) to review these fourth quarter results. To access the call, dial the Conferencing operator ten minutes prior to the start of the call at (416) 695-6616, or toll free at (800) 565-0813. A playback version of the conference call will be available for fourteen days at (416) 695-5800, or toll free at (800) 408-3053. The passcode for the playback version is 4012032. There will be a simultaneous audio-only webcast of the conference call, which can be accessed from our website at www.methanex.com. The webcast will be available on our website for three weeks following the call.

Methanex is a Vancouver-based, publicly traded company and is the world's largest supplier of methanol to major international markets. Methanex shares are listed for trading on the Toronto Stock Exchange in Canada under the trading symbol "MX", on the NASDAQ Global Market in the United States under the trading symbol "MEOH", and on the foreign securities market of the Santiago Stock Exchange in Chile under the trading symbol "Methanex". Methanex can be visited online at www.methanex.com.

FORWARD-LOOKING INFORMATION WARNING

This Fourth Quarter 2010 press release contains forward-looking statements with respect to us and the chemical industry. Refer to Forward-Looking Information Warning in the attached Fourth Quarter 2010 Management's Discussion and Analysis for more information.

(1) Adjusted EBITDA is a non-GAAP measure that does not have any standardized meaning prescribed by Canadian generally accepted accounting principles (GAAP) and therefore is unlikely to be comparable to similar measures presented by other companies. Refer to Additional Information - Supplemental Non-GAAP Measures in the attached Fourth Quarter 2010 Management's Discussion and Analysis for a description of each supplemental non-GAAP measure and a reconciliation to the most comparable GAAP measure.

4 Interim Report For the Three Months Ended December 31, 2010

At January 26, 2011 the Company had 92,669,257 common shares issued and outstanding and stock options exercisable for 3,229,753 additional common shares.

Share Information

Methanex Corporation's common shares are listed for trading on the Toronto Stock Exchange under the symbol MX, on the Nasdaq Global Market under the symbol MEOH and on the foreign securities market of the Santiago Stock Exchange in Chile under the trading symbol Methanex.



Transfer Agents & Registrars
CIBC Mellon Trust Company
320 Bay Street
Toronto, Ontario, Canada M5H 4A6
Toll free in North America: 1-800-387-0825

Investor Information
All financial reports, news releases and corporate information can be
accessed on our website at www.methanex.com.

Contact Information
Methanex Investor Relations
1800 - 200 Burrard Street
Vancouver, BC Canada V6C 3M1

E-mail: invest@methanex.com
Methanex Toll-Free: 1-800-661-8851



FOURTH QUARTER MANAGEMENT'S DISCUSSION AND ANALYSIS

Except where otherwise noted, all currency amounts are stated in United States dollars.

This Fourth Quarter 2010 Management's Discussion and Analysis dated January 26, 2011 should be read in conjunction with the 2009 Annual Consolidated Financial Statements and the Management's Discussion and Analysis included in the Methanex 2009 Annual Report. The Methanex 2009 Annual Report and additional information relating to Methanex is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.



Three Months Ended Years Ended
------------------------------ --------------------
($ millions, except Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
where noted) 2010 2010 2009 2010 2009
------------------------------------------------------ --------------------

Production (thousands of
tonnes) 913 895 955 3,540 3,543

Sales volumes (thousands
of tonnes):
Produced methanol 831 885 880 3,540 3,764
Purchased methanol 806 792 467 2,880 1,546
Commission sales (1) 151 101 152 509 638
---------------------------------------------------------------------------
Total sales volumes 1,788 1,778 1,499 6,929 5,948
Methanex average
non-discounted posted
price ($ per tonne) (2) 407 334 327 356 252
Average realized price
($ per tonne) (3) 348 286 282 306 225
Adjusted EBITDA (4) 71.3 57.3 72.9 266.7 141.8
Cash flows from
operating activities 10.4 48.0 35.7 152.9 110.3
Cash flows from
operating activities
before changes
in non-cash working
capital (4) 77.0 53.1 74.2 251.6 128.5
Operating income (4) 41.2 45.9 40.9 157.6 24.2
Net income 27.9 32.8 25.7 101.7 0.7
Net income before
unusual item (4) 27.9 10.6 25.7 79.5 0.7
Basic net income per
common share 0.30 0.36 0.28 1.10 0.01
Basic net income per
common share before
unusual item (4) 0.30 0.11 0.28 0.86 0.01
Diluted net income per
common share 0.30 0.35 0.28 1.09 0.01
Diluted net income per
common share before
unusual item (4) 0.30 0.11 0.28 0.85 0.01
Common share information
(millions of shares):
Weighted average number
of common shares 92.3 92.2 92.1 92.2 92.1
Diluted weighted
average number of
common shares 94.0 93.3 93.1 93.5 92.7
Number of common shares
outstanding, end of
period 92.6 92.2 92.1 92.6 92.1
---------------------------------------------------------------------------
(1) Commission sales represent volumes marketed on a commission basis.
Commission income is included in revenue when earned.
(2) Methanex average non-discounted posted price represents the average of
our non-discounted posted prices in North America, Europe and Asia
Pacific weighted by sales volume. Current and historical pricing
information is available at www.methanex.com.
(3) Average realized price is calculated as revenue, net of commissions
earned, divided by the total sales volumes of produced and purchased
methanol.
(4) These items are non-GAAP measures that do not have any standardized
meaning prescribed by Canadian generally accepted accounting principles
(GAAP) and therefore are unlikely to be comparable to similar measures
presented by other companies. Refer to Additional Information -
Supplemental Non-GAAP Measures for a description of each non-GAAP
measure and a reconciliation to the most comparable GAAP measure.



PRODUCTION SUMMARY



Annual 2010 2009 Q4 2010 Q3 2010 Q4 2009
(thousands of Capacity Produc- Produc- Produc- Produc- Produc-
tonnes) (1) tion tion tion tion tion
--------------------------------------------------------------------------

Chile I, II, III
and IV 3,800 935 942 208 194 265
Atlas (Trinidad)
(63.1% interest) 1,150 884 1,015 266 284 279
Titan (Trinidad) 900 891 764 233 217 188
New Zealand (2) 900 830 822 206 200 223
--------------------------------------------------------------------------
6,750 3,540 3,543 913 895 955
--------------------------------------------------------------------------

(1) The production capacity of our production facilities may be higher than
original nameplate capacity as, over time, these figures have been
adjusted to reflect ongoing operating efficiencies at these facilities.
(2) The production capacity of New Zealand represents only our 0.9 million
tonne per year Motunui facility which we restarted in late 2008.
Practical operating capacity will depend partially on the composition
of natural gas feedstock and may be lower than the stated capacity
above. We also have additional potential production capacity that is
currently idled in New Zealand (refer to the New Zealand section for
more information).



Chile

We continue to operate our methanol facilities in Chile significantly below site capacity. This is primarily due to curtailments of natural gas supply from Argentina - refer to the Management's Discussion and Analysis included in our 2009 Annual Report for more information.

During the fourth quarter of 2010, production from our methanol facilities in Chile was 208,000 tonnes compared with 194,000 tonnes during the third quarter of 2010. Higher production during the fourth quarter of 2010 was primarily a result of higher natural gas deliveries from the state-owned energy company Empresa Nacional del Petroleo (ENAP) as demand for natural gas for residential purposes was lower in the warmer season in the southern hemisphere. We are currently operating one plant in Chile. The operating rate of our Chile site is primarily dependent on demand for natural gas for residential purposes which is higher in the southern hemisphere winter, production rates from existing natural gas fields, and the level of natural gas deliveries from further exploration and development activities in southern Chile.

Our goal is to progressively increase production at our Chile site with natural gas from suppliers in Chile. We are pursuing investment opportunities with ENAP, GeoPark Chile Limited (GeoPark) and others to help accelerate natural gas exploration and development in southern Chile. We are working with ENAP to develop natural gas in the Dorado Riquelme block in southern Chile. Under the arrangement, we fund a 50% participation in the block and, as at December 31, 2010, we had contributed approximately $86 million. Over the past few years, we have also provided GeoPark with $57 million (of which approximately $32 million had been repaid at December 31, 2010) to support and accelerate GeoPark's natural gas exploration and development activities in southern Chile. GeoPark has agreed to supply us with all natural gas sourced from the Fell block in southern Chile under a ten-year exclusive supply arrangement that commenced in 2008. During the fourth quarter of 2010 approximately 60% of total production at our Chilean facilities was produced with natural gas supplied from the Fell and Dorado Riquelme blocks.

Other investment activities are also supporting the acceleration of natural gas exploration and development in areas of southern Chile. In late 2007, the government of Chile completed an international bidding round to assign oil and natural gas exploration areas that lie close to our production facilities and announced the participation of several international oil and gas companies. The terms of the agreements from the bidding round require minimum investment commitments. To date, two companies that participated in the bidding round have advised of gas discoveries and we expect first deliveries of gas from these new finds in 2011. We are participating in a consortium for two exploration blocks under this bidding round - the Tranquilo and Otway blocks. The consortium includes Wintershall, GeoPark, and Pluspetrol each having 25% participation and International Finance Corporation, member of the World Bank Group, and Methanex each having 12.5% participation. GeoPark is the operator of both blocks. At December 31, 2010, we had contributed approximately $2 million for our share of the exploration costs associated with these blocks.

We cannot provide assurance that ENAP, GeoPark or others will be successful in the exploration and development of natural gas or that we will obtain any additional natural gas from suppliers in Chile on commercially acceptable terms.

Trinidad

Our equity ownership of methanol facilities in Trinidad represents over 2.0 million tonnes of competitive-cost annual capacity. During the fourth quarter of 2010, these facilities produced 499,000 tonnes compared with 501,000 tonnes during the third quarter of 2010.

New Zealand

Our New Zealand facilities produced 206,000 tonnes during the fourth quarter of 2010 compared with 200,000 tonnes during the third quarter of 2010. We currently have natural gas contracts with a number of gas suppliers which will allow us to continue to operate our 900,000 tonne per year Motunui plant through 2011 and 2012.

We currently have 1.4 million tonnes per year of idled capacity in New Zealand, including a second 0.9 million tonne per year Motunui plant and the 0.5 million tonne per year Waitara Valley plant. These facilities provide the potential to increase production in New Zealand depending on methanol supply and demand dynamics and the availability of economically priced natural gas feedstock.

Egypt

Construction of the 1.3 million tonne per year methanol facility in Egypt is now complete and commissioning is nearing completion. In January 2011 the plant produced first methanol and we expect production to ramp-up over the first quarter of 2011. We own 60% of the facility and we will market 100% of the methanol production.

Medicine Hat

We are currently working on the restart of our 470,000 tonne per year methanol plant in Medicine Hat, Alberta, Canada which is scheduled to commence operations early in the second quarter of 2011. In support of the restart, we have commenced a program to purchase natural gas on the Alberta gas market. To date we have purchased sufficient natural gas to meet 80% of our requirements when operating at capacity for the period from startup to October 2012. The plant has been idle since 2001 and the estimated capital cost to restart the plant is approximately $40 million, of which $10 million was incurred in 2010 and $30 million will be incurred in the first quarter of 2011.

EARNINGS ANALYSIS

Our operations consist of a single operating segment - the production and sale of methanol. In addition to the methanol that we produce at our facilities, we also purchase and re-sell methanol produced by others and we sell methanol on a commission basis. We analyze the results of all methanol sales together, excluding commission sales volumes. The key drivers of change in our Adjusted EBITDA for methanol sales are average realized price, sales volume and cash costs.

For a further discussion of the definitions and calculations used in our Adjusted EBITDA analysis, refer to How We Analyze Our Business.

For the fourth quarter of 2010, we recorded Adjusted EBITDA of $71.3 million and net income of $27.9 million ($0.30 per share on a diluted basis). This compares with Adjusted EBITDA of $57.3 million and net income of $32.8 million ($0.35 per share on a diluted basis) and net income of $10.6 million ($0.11 per share on a diluted basis) before unusual item for the third quarter of 2010 and Adjusted EBITDA of $72.9 million and net income of $25.7 million ($0.28 per share on a diluted basis) for the fourth quarter of 2009.

For the year ended December 31, 2010, we recorded Adjusted EBITDA of $266.7 million and net income of $101.7 million ($1.09 per share on a diluted basis) and net income of $79.5 million ($0.85 per share on a diluted basis) before unusual item. During the year ended 2010, we recorded an after-tax gain of $22.2 million related to the sale of land and terminal facilities in Kitimat, Canada. This compares with Adjusted EBITDA of $141.8 million and net income of $0.7 million ($0.01 per share on a diluted basis) for the year ended December 31, 2009.

A reconciliation from net income to net income before unusual item is as follows:



($ millions) Q4 2010 2010
--------------------------------------------------------------------------

Net income $ 27.9 $ 101.7
Gain on sale of Kitimat assets - (22.2)
--------------------------------------------------------------------------
Net income before unusual item $ 27.9 $ 79.5
--------------------------------------------------------------------------



Adjusted EBITDA

The changes in Adjusted EBITDA resulted from changes in the following:



Q4 2010 Q4 2010 2010
compared with compared with compared with
($ millions) Q3 2010 Q4 2009 2009
--------------------------------------------------------------------------

Average realized price $ 101 $ 106 $ 520
Sales volumes (2) 24 62
Total cash costs (85) (132) (457)
--------------------------------------------------------------------------
$ 14 $ (2) $ 125
--------------------------------------------------------------------------



Average realized price



Three Months Ended Years Ended
--------------------------- ------------------
($ per tonne, Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
except where noted) 2010 2010 2009 2010 2009
------------------------------------------------------- ------------------

Methanex average non-
discounted posted price (1) 407 334 327 356 252
Methanex average realized
price 348 286 282 306 225
Average discount 14% 14% 14% 14% 11%
------------------------------------------------------- ------------------

(1) Methanex average non-discounted posted price represents the average of
our non-discounted posted prices in North America, Europe and Asia
Pacific weighted by sales volume. Current and historical pricing
information is available at www.methanex.com.



During 2010, methanol demand growth was strong with increases in demand primarily driven by both traditional and energy derivatives in Asia (particularly in China). As we entered the fourth quarter of 2010, market conditions were tight as demand was strong and there were a number of planned and unplanned outages across the methanol industry. As a result, there was an increase in spot and contract methanol prices in the fourth quarter (refer to Supply/Demand Fundamentals section for more information). Our average non-discounted posted price for the fourth quarter of 2010 was $407 per tonne compared with $334 per tonne for the third quarter of 2010. Our average realized price for the fourth quarter of 2010 was $348 per tonne compared with $286 per tonne for the third quarter of 2010 and this increased revenue by $101 million.

As a result of the factors described above, we have experienced significantly higher methanol pricing and revenue in 2010 compared with 2009. Our average realized price for the fourth quarter of 2010 was $348 per tonne compared with $282 per tonne for the fourth quarter of 2009 and this increased revenue by $106 million. Our average realized price for the year ended December 31, 2010 was $306 per tonne compared with $225 per tonne for the same period in 2009 and this increased revenue by $520 million.

Sales volumes

Total methanol sales volumes excluding commission sales volumes for the fourth quarter of 2010 were lower compared with the third quarter of 2010 by 40,000 tonnes and this resulted in $2 million lower Adjusted EBITDA. Total methanol sales volumes excluding commission sales volumes for the three months and year ended December 31, 2010 were higher than comparable periods in 2009 by 290,000 tonnes and 1,110,000 tonnes, respectively. This resulted in higher Adjusted EBITDA for the fourth quarter of 2010 and year ended December 31, 2010 compared with the same periods in 2009 by $24 million and $62 million, respectively. We have increased sales volumes in 2010 compared with 2009 primarily in anticipation of increased methanol supply from Egypt and our other production facilities.

Total cash costs

The primary driver of changes in our total cash costs are changes in the cost of methanol we produce at our facilities and changes in the cost of methanol we purchase from others. Our production facilities are underpinned by natural gas purchase agreements with pricing terms that include base and variable price components. The variable component is adjusted in relation to changes in methanol prices above pre-determined prices at the time of production. We supplement our production with methanol produced by others through methanol offtake contracts and purchases on the spot market to meet customer needs and support our marketing efforts within the major global markets. We have adopted the first-in, first-out method of accounting for inventories and it generally takes between 30 and 60 days to sell the methanol we produce or purchase. Accordingly, the changes in Adjusted EBITDA as a result of changes in natural gas costs and purchased methanol costs will depend on changes in methanol pricing and the timing of inventory flows.

The impact on adjusted EBITDA from changes in our cash costs are explained below:



Q4 2010 Q4 2010 2010
compared with compared with compared with
($ millions) Q3 2010 Q4 2009 2009
--------------------------------------------------------------------------

Natural gas costs on sales of
produced methanol $ (13) $ (22) $ (98)
Proportion of purchased
methanol sales (4) (30) (89)
Purchased methanol costs (47) (56) (223)
Stock-based compensation (10) (12) (20)
Other, net (11) (12) (27)
--------------------------------------------------------------------------
Decrease in EBITDA $ (85) $ (132) $ (457)
--------------------------------------------------------------------------



Natural gas costs on sales of produced methanol

Natural gas costs on sales of produced methanol for the fourth quarter of 2010 and the year ended December 31, 2010, were higher than comparable periods in 2009, primarily as a result of higher methanol pricing.

Proportion of purchased methanol sales

The cost of purchased methanol is directly linked to the selling price for methanol at the time of purchase and the cost of purchased methanol is generally higher than the cost of produced methanol. Accordingly, an increase in the proportion of purchased methanol sales results in an increase in our overall cost structure for a given period. The proportion of purchased methanol sales for the fourth quarter of 2010 and the year ended December 31, 2010 was higher for all comparable periods noted above.

Purchased methanol costs

Purchased methanol costs were higher for the fourth quarter of 2010 and the year ended December 31, 2010 compared with all periods noted above, primarily as a result of higher methanol pricing.

Stock-based compensation

We grant stock-based awards as an element of compensation. Stock-based awards granted can include stock options, deferred share units, restricted share units, performance share units, share appreciation rights or tandem share appreciation rights.

For stock options, the cost is measured based on an estimate of the fair value at the date of grant and this grant-date fair value is recognized as compensation expense over the related service period. Accordingly, stock-based compensation expense associated with stock options will not vary significantly from period to period.

Deferred, restricted and performance share units are grants of notional common shares that are redeemable for cash upon vesting based on the market value of the Company's common shares and are non-dilutive to shareholders. Performance share units have an additional feature where the ultimate number of units that vest will be determined by the Company's total shareholder return in relation to a predetermined target over the period to vesting. The number of units that will ultimately vest will be in the range of 50% to 120% of the original grant. Share appreciation rights and tandem share appreciation rights are units which grant the holder the right to receive a cash payment upon exercise for the difference between the market price of the Company's common shares and the exercise price which is determined at the date of grant. For deferred, restricted and performance share units, the fair value is initially measured at the grant date based on the market value of common shares. Stock appreciation rights and tandem stock appreciation rights are measured based on the intrinsic value, the amount by which the market value of common shares exceeds the exercise price. For all of the stock-based awards, the initial value and any subsequent change in value due to changes in the market value of common shares is recognized in earnings over the related service period for the proportion of the service that has been rendered at each reporting date. Accordingly, stock-based compensation associated with these stock-based awards may vary significantly from period to period as a result of changes in the share price.

Stock-based compensation expense for the fourth quarter of 2010 was $17 million compared with $7 million for the third quarter of 2010. The increase in stock-based compensation of $10 million during the fourth quarter of 2010 was primarily due to the impact of the increase in the share price during the fourth quarter from $24.49 per share to $30.40 per share. This resulted in a higher charge of approximately $4 million from an increase in the fair value of deferred, restricted and performance share units and a higher charge of approximately $3 million related to the value of share appreciation rights and tandem share appreciation rights which carried no accounting value prior to the fourth quarter of 2010. Additionally, the increase in share price resulted in a higher charge of approximately $3 million due to an increase in the estimated number of performance share units that will ultimately vest.

Other, net

For the fourth quarter of 2010 compared with the third quarter of 2010 and the fourth quarter of 2009, ocean freight and other logistics costs were higher by $7 million compared with both periods primarily as a result of lower backhaul cost recoveries and higher bunker fuel costs. Selling, general and administrative expenses were also higher by $4 million and $5 million, respectively, primarily as a result of higher employee and other costs.

For the year ended December 31, 2010 compared with 2009, ocean freight and other logistics costs were higher by $16 million primarily as a result of lower backhaul cost recoveries and higher bunker fuel costs. Selling, general and administrative expenses were also higher by $11 million primarily as a result of higher employee and other costs.

Depreciation and Amortization

Depreciation and amortization was $30 million for the fourth quarter of 2010 compared with $34 million for the third quarter of 2010 and $32 million for the fourth quarter of 2009. Depreciation and amortization was $131 million for the year ended December 31, 2010 compared with $118 million for the comparable period in 2009. The increase in depreciation and amortization expense for 2010 compared with 2009 was primarily due to the inclusion of depletion charges associated with our oil and gas investment in Chile. Upon receipt of final approval from the government of Chile in the third quarter of 2009, we adopted the full cost methodology for accounting for oil and gas exploration costs associated with our 50% participation in the Dorado Riquelme block in Southern Chile (refer to Production Summary section for more information). Under these accounting standards, cash investments in the block are initially capitalized and are recorded to earnings through non-cash depletion charges as natural gas is produced from the block.

Interest Expense



Three Months Ended Years Ended
--------------------------- ------------------
Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
($ millions) 2010 2010 2009 2010 2009
------------------------------------------------------- ------------------

Interest expense before
capitalized interest $ 16 $ 16 $ 15 $ 62 $ 59
Less capitalized interest (10) (10) (9) (38) (32)
------------------------------------------------------- ------------------

Interest expense $ 6 $ 6 $ 6 $ 24 $ 27
------------------------------------------------------- ------------------



Capitalized interest relates to interest costs capitalized during the construction and commissioning of the 1.3 million tonne per year methanol facility in Egypt.

Interest and Other Income (Expense)



Three Months Ended Years Ended
--------------------------- ------------------
Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
($ millions) 2010 2010 2009 2010 2009
-------------------------------------------------------- ------------------

Interest and other
income (expense) $ 4 $ (1) $ - $ 3 $ -
-------------------------------------------------------- ------------------



Interest and other income for the fourth quarter of 2010 was $4 million compared with an expense of $1 million for the third quarter of 2010 and nil for the fourth quarter of 2009. The increase in interest and other income during the fourth quarter of 2010 compared with the third quarter of 2010 and the fourth quarter of 2009 was primarily due to the impact of changes in foreign exchange rates.

Income Taxes

We recorded income tax expense of $11.2 million for the fourth quarter of 2010 compared with income tax expense of $5.9 million for the third quarter of 2010 and income tax expense of $9.0 million for the fourth quarter of 2009. The effective tax rate for the fourth quarter of 2010 was approximately 29% compared with approximately 36% for the third quarter of 2010.

The statutory tax rate in Chile and Trinidad, where we earn a substantial portion of our pre-tax earnings, is 35%. Our Atlas facility in Trinidad has partial relief from corporation income tax until 2014. In Chile the tax rate consists of a first tier tax that is payable when income is earned and a second tier tax that is due when earnings are distributed from Chile. The second tier tax is initially recorded as future income tax expense and is subsequently reclassified to current income tax expense when earnings are distributed.

SUPPLY/DEMAND FUNDAMENTALS

During 2010, methanol demand growth was strong, increasing by 14% to a total of approximately 45 million tonnes. Increases in demand have been primarily driven by both traditional and energy derivatives in Asia (particularly in China). More recently, we have also seen increases in traditional derivative demand in other regions including Europe and North America.

Traditional derivatives account for about two thirds of global methanol demand and are correlated to industrial production.

Energy derivatives account for about one third of global methanol demand and over the last few years, high energy prices have driven strong demand growth for methanol into energy applications such as gasoline blending and DME, primarily in China. Methanol blending into gasoline in China has been particularly strong and we believe that future growth in this application is supported by recent regulatory changes in that country. For example, an M85 (or 85% methanol) national standard took effect December 1, 2009, and we expect an M15 (or 15% methanol) national standard to be released in 2011. We believe demand potential into energy derivatives will be stronger in a high energy price environment.



Methanex Non-Discounted Regional Posted Prices (1)

Jan Dec Nov Oct
(US$ per tonne) 2011 2010 2010 2010
-------------------------------------------------------------

United States 449 459 442 359
Europe (2) 428 367 379 385
Asia 460 460 445 345
-------------------------------------------------------------
(1) Discounts from our posted prices are offered to customers
based on various factors.
(2) EUR325 for Q1 2011 (Q4 2010 - EUR277) converted to United
States dollars.
-------------------------------------------------------------



As we entered the fourth quarter of 2010, market conditions were tight, as demand was strong and there were a number of planned and unplanned production outages across the methanol industry. As a result, there was a sharp increase in spot and contract methanol prices in the fourth quarter. Early in the first quarter of 2011, spot methanol prices moderated slightly. Our average non-discounted price for January 2011 is approximately $450 per tonne and we have recently announced a decrease to the Methanex non-discounted list price of $23 per tonne in North America for February. We also expect to see contract prices in Asia decrease for February.

The next increment of world scale capacity outside of China is our 1.3 million tonne per year plant in Egypt which is in the late stages of commissioning and produced first methanol this month. Beyond this, there is little new capacity additions outside China expected over the next few years. Our 470,000 tonne plant in Medicine Hat is expected to restart in April 2011. There is also a 0.85 million tonne plant expected to restart in Beamount, Texas and a 0.7 million tonne plant expected to start up in Azerbaijan and we expect product from both of these plants will enter the market in 2012.

In late December 2010, the Chinese Ministry of Commerce (MOFCOM) issued its Final Determination in its investigation into domestic methanol producer allegations of dumping and recommended duties of around 9% be imposed on imports from existing producers in New Zealand, Malaysia and Indonesia. However, citing special circumstances, the Customs Tariff Commission of the State Council decided to suspend enforcement of the anti-dumping measures which will allow methanol from all three countries to enter into China without the imposition of additional duties. In the event that the suspension is lifted, we do not expect there to be any significant impact on industry supply/demand fundamentals and we would realign our supply chain.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities before changes in working capital in the fourth quarter of 2010 were $77 million compared with $53 million for the third quarter of 2010 and $74 million for the fourth quarter of 2009.

During the fourth quarter of 2010, we paid a quarterly dividend of US$0.155 per share, or $14 million.

During the fourth quarter of 2010, total plant and equipment related to costs for the new methanol plant in Egypt were $21 million. EMethanex has limited recourse debt facilities of $530 million which were fully drawn as at December 31, 2010. The first debt principal payment of $16 million was made on September 30, 2010.

During the third quarter of 2010, we sold our land and terminal facilities at the Kitimat, Canada site and received the cash proceeds from this sale of $32 million in the fourth quarter of 2010.

We have an agreement with ENAP to participate in natural gas exploration and development in the Dorado Riquelme hydrocarbon exploration block in southern Chile. Under the arrangement, we fund a 50% participation in the block and have contributed $86 million to date. We expect to make further contributions over the next few years to fully realize the potential of the block. These contributions will be based on annual budgets established by ENAP and Methanex in accordance with the Joint Operating Agreement that governs this development.

We have agreements with GeoPark under which we have provided $57 million in financing to support and accelerate GeoPark's natural gas exploration and development activities in southern Chile. During the fourth quarter of 2010, GeoPark repaid $15 million from proceeds of a debt financing bringing cumulative repayments for this financing to $32 million as at December 31, 2010. We have no further obligations to provide funding to GeoPark.

We operate in a highly competitive commodity industry and believe it is appropriate to maintain a conservative balance sheet and to maintain financial flexibility. Our cash balance at December 31, 2010 was $194 million. We have a strong balance sheet, no near term re-financing requirements, and an undrawn $200 million credit facility provided by highly rated financial institutions that expires in mid-2012. We invest our cash only in highly rated instruments that have maturities of three months or less to ensure preservation of capital and appropriate liquidity. Our planned capital maintenance expenditure program directed towards major maintenance, turnarounds and catalyst changes for existing operations, is currently estimated to total approximately $80 million for the period to the end of 2012. We also recently announced our intention to restart our 470,000 tonne per year methanol plant in Medicine Hat early in the second quarter with an estimated capital cost to restart the plant of approximately $40 million, of which $10 million was incurred in 2010 and $30 million will be incurred in the first quarter of 2011.

We believe we are well positioned to meet our financial commitments and continue to invest to grow the Company.



The credit ratings for our unsecured notes at December 31, 2010
were as follows:
-----------------------------------------------------------------
Standard & Poor's Rating Services BBB- (stable)
Moody's Investor Services Ba1 (stable)

Credit ratings are not recommendations to purchase, hold or
sell securities and do not comment on market price or suitability
for a particular investor. There is no assurance that any rating
will remain in effect for any given period of time or that any
rating will not be revised or withdrawn entirely by a rating
agency in the future.
-----------------------------------------------------------------



SHORT-TERM OUTLOOK

Methanol demand in 2010 for both traditional and energy uses in Asia (particularly China) has been strong and more recently there has also been demand increases for traditional derivatives in other regions including North America and Europe. This strong demand combined with a significant amount of planned and unplanned production outages across the methanol industry resulted in a sharp increase in spot and contract methanol prices in the fourth quarter. Entering the first quarter, while methanol demand continues to be strong, we have seen methanol prices moderate but remain at strong levels.

We anticipate a significant increase in our production capability in 2011. The 1.3 million tonne per year Egypt Project is in the late stages of commissioning and produced first methanol last week. We are also working on the restart of our 470,000 tonne per year plant in Medicine Hat, Alberta which we also expect to commence production early in the second quarter of 2011. With the addition of these two production sites, we are well positioned to increase our production and earnings capability this year.

The methanol price will ultimately depend on the strength of the global economy, industry operating rates, global energy prices, the rate of industry restructuring and the strength of global demand. We believe that our financial position and financial flexibility, outstanding global supply network and low cost position will provide a sound basis for Methanex to continue to be the leader in the methanol industry and to invest to grow the Company.

CONTROLS AND PROCEDURES

For the three months ended December 31, 2010, no changes were made in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ANTICIPATED CHANGES TO CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

International Financial Reporting Standards

The Canadian Accounting Standards Board confirmed January 1, 2011 as the changeover date for Canadian publicly accountable enterprises to start using International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). IFRS uses a conceptual framework similar to Canadian GAAP, but there are significant differences in recognition, measurement and disclosures.

As a result of the IFRS transition, changes in accounting policies are likely and may materially impact our consolidated financial statements. The IASB will also continue to issue new accounting standards throughout 2011, and as a result, the final impact of IFRS on our consolidated financial statements will only be measured once all the IFRS applicable at the conversion date are known.

We have established a working team to manage the transition to IFRS. Additionally, we have established a formal project governance structure that includes the Audit, Finance and Risk Committee, senior management, and an IFRS steering committee to monitor progress and review and approve recommendations from the working team for the transition to IFRS. The working team provides regular updates to the IFRS steering committee and to the Audit, Finance and Risk Committee of the Board.

In 2008, we commenced our plan to convert our consolidated financial statements to IFRS at the changeover date of January 1, 2011 with comparative financial results for 2010. The IFRS transition plan addresses the impact of IFRS on accounting policies and implementation decisions, infrastructure, business activities and control activities. We are progressing according to schedule and continue to be on track toward project completion and will issue our first interim consolidated financial statements in accordance with IFRS as issued by the IASB beginning with the first quarter ending March 31, 2011 with comparative financial results for 2010. We will provide an update on the status of the project and its impact on financial reporting in our 2010 annual Management's Discussion and Analysis. A summary status of the key elements of the changeover plan is as follows:



Accounting policies and implementation decisions

-- Key activities:
-- Identification of differences in Canadian GAAP and IFRS accounting
policies
-- Selection of ongoing IFRS policies
-- Selection of IFRS 1, First-time Adoption of International Financial
Reporting Standards ("IFRS 1") choices
-- Development of financial statement format
-- Quantification of effects of change in initial IFRS 1 disclosures
and 2010 financial statements
-- Status:
-- We have identified differences between our accounting policies
under Canadian GAAP and accounting policy choices under IFRS, both
on an ongoing basis and with respect to certain choices available
on conversion, in accordance with IFRS 1
-- We have engaged the Company's external auditors, KPMG LLP, to
discuss our proposed IFRS accounting policies to ensure consistent
interpretation of IFRS guidance in all areas
-- We continue to monitor changes in accounting policies issued by the
IASB and the impact of those changes on our accounting policies
under IFRS
-- We have developed a process for compiling parallel 2010 IFRS
results for comparative reporting purposes in 2011
-- See the corresponding sections below for discussion of optional
exemptions under IFRS 1 that the Company expects to elect on
transition to IFRS, accounting policy changes that management
considers most significant to the Company, and an overview of the
expected adjustments to the financial statements on transition to
IFRS

Infrastructure: Financial reporting expertise and communications

-- Key activities:
-- Development of IFRS expertise
-- Status:
-- We have provided training for key employees and senior management
-- In 2009, we held an IFRS information session with the Audit, Risk
and Finance Committee that included an in-depth review of
differences between Canadian GAAP and IFRS, a review of the
implementation timeline, an overview of the project activities to
date and a preliminary discussion of the significant impact areas
of IFRS
-- In 2010, we held IFRS information sessions with the IFRS steering
committee, the Audit, Finance and Risk Committee, and the Board
that included an in-depth review of accounting policy changes on
transition to IFRS, a discussion of optional exemptions under
IFRS 1, First-time Adoption of International Financial Reporting
Standards that the Company expects to elect on transition to IFRS,
and an overview of the expected adjustments to the financial
statements on transition to IFRS
-- In 2010, we held an external Investor Day Conference, which
included a presentation to shareholders, research analysts, and
other members of the investment community on the expected
significant impacts of the IFRS transition
-- We will continue to provide additional training and updates for key
employees, senior management, the Audit, Finance and Risk
Committee, the Board and other stakeholders throughout the
conversion period

Infrastructure: Information technology and data systems

-- Key activities:
-- Identification of system requirements for the conversion and
post-conversion periods
-- Status:
-- We have assessed the impact on system requirements for the
conversion and post-conversion periods and expect there will be no
significant impact to applications arising from the transition to
IFRS

Business activities: Financial covenants

-- Key activities:
-- Identification of impact on financial covenants and financing
relationships
-- Completion of any required renegotiations/changes
-- Status:
-- The financial covenant requirements in our financing relationships
are measured on the basis of Canadian GAAP in effect at the
commencement of the various agreements, and the transition to IFRS
will therefore have no impact on our current financial covenant
requirements
-- We will maintain a process to compile our financial results on a
historical Canadian GAAP basis and to monitor financial covenant
requirements through to the conclusion of our current financing
relationships

Business activities: Compensation arrangements

-- Key activities:
-- Identification of impact on compensation arrangements
-- Assessment and implementation of required changes
-- Status:
-- We have identified compensation policies that rely on indicators
derived from the financial statements
-- As part of the transition project, we will ensure that compensation
arrangements incorporate IFRS results in accordance with the
Company's overall compensation principles
-- We plan on having an information session to educate the Human
Resources Committee of the Board about the expected impacts of the
IFRS transition on compensation arrangements.

Control activities: Internal control over financial reporting

-- Key activities:
-- For all accounting policy changes identified, assessing the design
and effectiveness of respective changes to Internal Controls over
Financial Reporting ("ICFR")
-- Implementation of appropriate changes
-- Status:
-- We have identified the required accounting process changes that
result from the application of IFRS accounting policies; these
changes are not considered significant
-- As part of the transition project, we will complete the design,
implementation and documentation of the accounting process changes
that result from the application of IFRS accounting policies

Control activities: Disclosure controls and procedures

-- Key activities:
-- For all accounting policy changes identified, assessing the design
and effectiveness of respective changes to Disclosure Controls and
Procedures ("DC&P")
-- Implementation of appropriate changes
-- Status:
-- We continue to provide IFRS project updates in quarterly and annual
disclosure documents



IFRS 1 First-time Adoption of International Financial Reporting Standards

Adoption of IFRS requires the application of IFRS 1, First-time Adoption of International Financial Reporting Standards, which provides guidance for an entity's initial adoption of IFRS. IFRS 1 gives entities adopting IFRS for the first time a number of optional exemptions and mandatory exceptions, in certain areas, to the general requirement for full retrospective application of IFRS. The following are the optional exemptions available under IFRS 1 that the Company expects to elect on transition to IFRS. The Company continues to review all IFRS 1 exemptions and will implement those determined to be most appropriate in our circumstances on transition to IFRS. The list below and comments should not be regarded as a complete list of IFRS 1 that are available to the Company as a result of the transition to IFRS.

Business Combinations

Under IFRS 1 an entity has the option to retroactively apply IFRS 3, Business Combinations to all business combinations or may elect to apply the standard prospectively only to those business combinations that occur after the date of transition. The Company expects to elect this exemption under IFRS 1, which removes the requirement to retrospectively restate all business combinations prior to the date of transition to IFRS.

Employee Benefits

We have defined benefit pension plans in Canada and Chile. IFRS 1 provides an option to recognize all cumulative actuarial gains and losses on defined benefit pension plans existing at the date of transition immediately in retained earnings, rather than continuing to defer and amortize into the results of operations. The Company currently intends to elect this exemption under IFRS 1. As at January 1, 2010 this results in a decrease to retained earnings of $16 million, a decrease to other assets of $10 million and an increase to other long-term liabilities of $6 million. In comparison to Canadian GAAP, there will be lower future pension expense as a result of this immediate recognition to retained earnings of these actuarial losses on transition to IFRS.

Fair Value or Revaluation as Deemed Cost

IFRS 1 provides an option to allow a first-time IFRS adopter to elect to use the amount determined under a previous GAAP revaluation as the deemed cost of an item of property, plant & equipment so long as the revaluation was broadly comparable to either fair value or cost or depreciated cost under IFRS. We consider our Canadian GAAP writedown of certain assets as a "revaluation broadly comparable to fair value" and will elect the written down amount to be deemed IFRS cost. The IFRS carrying value of those assets on transition to IFRS is therefore consistent with the Canadian GAAP carrying value on the transition date.

Share-based Payment Transactions

IFRS 1 permits an exemption for the application of IFRS 2, Share-based Payments, to equity instruments granted before November 7, 2002 and those granted but fully vested before the date of transition to IFRS. Accordingly, we expect to elect this exemption and will apply IFRS 2 for stock options granted after November 7, 2002 that are not fully vested at January 1, 2010.

Changes in Asset Retirement Obligations

Under IFRS, we are required to determine a best estimate of asset retirement obligations for all sites whereas under Canadian GAAP asset retirement obligations were not recognized with respect to assets with indefinite or indeterminate lives. In addition, under IFRS a change in market-based discount rate will result in a change in the measurement of the provision. We will elect to apply the IFRS 1 exemption whereby we have measured the asset retirement obligations at January 1, 2010 in accordance with the requirements in IAS 37 Provisions, estimated the amount that would have been in property, plant and equipment when the liabilities first arose and discounted the transition date liability to that date using our best estimate of the historical risk-free discount rate. As at January 1, 2010, adjustments to the financial statements to recognize asset retirement obligations on transition to IFRS are recognized as an increase to other long-term liabilities of approximately $5 million and an increase to property, plant and equipment of approximately $1 million, with the balancing amount recorded as a decrease to retained earnings to reflect the depreciation expense and interest accretion since the date the liabilities first arose.

Oil & Gas Assets

For a first-time adopter that has previously employed the full cost method in accounting for oil and natural gas exploration and development expenditures, IFRS 1 provides an exemption which allows entities to measure those assets at the transition date at amounts determined under the entity's previous GAAP. We will elect under IFRS 1 to carry forward the Canadian GAAP oil and gas asset carrying value as of January 1, 2010 as our balance on transition to IFRS.

Significant Impacts on Transition to IFRS

The Company has completed its initial assessment of the impacts of the transition to IFRS. Based on an analysis of Canadian GAAP and IFRS in effect at December 31, 2010, we have identified several significant differences between our current accounting policies and those expected to apply in preparing IFRS consolidated financial statements. In the determination of what constitutes a significant impact to our consolidated financial statements, we have identified the following:



-- Areas of difference between IFRS and Canadian GAAP which have a
significant opening day transition financial statement impact.

-- Areas of difference between IFRS and Canadian GAAP which present
greater risk of potential future financial statement impact.

-- Areas of potential future changes to IFRS which could have a
significant financial statement impact.



Information on those changes that management considers most significant to the Company are presented below.

Interest in Joint Ventures

Under Canadian GAAP, our 63.1% interest in Atlas Methanol Company (Atlas) is accounted for using proportionate consolidation in the accounting for joint ventures. Current IFRS allows a choice between proportionate consolidation and equity accounting in the accounting for joint ventures. On transition to IFRS, we expect to choose proportionate consolidation in accounting for our interest in Atlas.

The IASB is currently proceeding on projects related to consolidation and joint venture accounting. The IASB is revising the definition of "control", which is a criterion for consolidation accounting. In addition, future changes to IFRS in the accounting for joint ventures are expected and these changes may remove the option for proportionate consolidation and allow only the equity method of accounting for such interests. The impact of applying consolidation accounting or the equity method of accounting does not result in any change to net earnings or shareholders' equity, but would result in a significant presentation impact.

The impact these projects may have on the conclusions related to the accounting treatment of our interest in joint ventures is currently unknown. We continue to monitor changes in accounting policies issued by the IASB in this area.

Leases

Canadian GAAP requires an arrangement that at its inception can be fulfilled only through the use of a specific asset or assets, and which conveys a right to use that asset, may be a lease or contain a lease, and therefore should be accounted for as a lease, regardless of whether it takes the legal form of a lease, and therefore should be recorded as an asset with a corresponding liability. However, Canadian GAAP has grandfathering provisions that exempts contracts entered into before 2004 from these requirements.

IFRS has similar accounting requirements as Canadian GAAP for lease-like arrangements, with IFRS requiring full retrospective application. We have long-term oxygen supply contracts for our Atlas and Titan methanol plants in Trinidad, executed prior to 2004, which are regarded as finance leases under these standards. Accordingly, the oxygen supply contracts are required to be accounted for as finance leases from original inception of the lease. We measured the value of these finance leases and applied finance lease accounting retrospectively from inception to January 1, 2010 to determine the opening day IFRS impact. As at January 1, 2010 this results in an increase to property, plant and equipment of $62 million and other long-term liabilities of $74 million with a corresponding decrease to retained earnings of $12 million. In comparison to Canadian GAAP, this accounting treatment will result in lower operating costs and higher interest and depreciation charges with no significant impact to net earnings.

As part of their global conversion project, the IASB and the U.S. Financial Accounting Standards Board ("FASB") issued in August 2010 a joint Exposure Draft proposing that all leases would be required to be recognized on-balance sheet. We have a fleet of ocean going vessels under time charter agreements with terms up to 15 years. The proposed rules would require these time charter agreements to be recorded on-balance sheet resulting in a material increase to our assets and liabilities. The boards expect to issue a final standard in mid-2011 with a likely effective date for the standard no earlier than 2012. We continue to monitor changes in accounting policies issued by the IASB in this area.

Impairment of Assets

If there is an indication that an asset may be impaired, an impairment test must be performed. Under Canadian GAAP, this is a two-step impairment test in which (1) undiscounted future cash flows are compared to the carrying value; and (2) if those undiscounted cash flows are less than the carrying value, the asset is written down to fair value. Under IFRS, an entity is required to assess, at the end of each reporting period, whether there is any indication that an asset may be impaired. If such an indication exists, the entity shall estimate the recoverable amount of the asset by performing a one-step impairment test, which requires a comparison of the carrying value of the asset to the higher of value in use and fair value less costs to sell. Value in use is defined as the present value of future cash flows expected to be derived from the asset in its current state.

As a result of this difference, in principle, impairment writedowns may be more likely under IFRS than are currently identified and recorded under Canadian GAAP. The extent of any new writedowns, however, may be partially offset by the requirement under IAS 36, Impairment of Assets, to reverse any previous impairment losses where circumstances have changed such that the impairments have been reduced. Canadian GAAP prohibits reversal of impairment losses. We have concluded that the adoption of these standards will not result in a change to the carrying value of our assets on transition to IFRS.

Provisions

Under Canadian GAAP, a provision is required to be recorded in the financial statements when required payment is considered "likely" and can be reasonably estimated. The threshold for recognition of provisions under IFRS is lower than that under Canadian GAAP as provisions must be recognized if required payment is "probable". Therefore, in principle, it is possible that there may be some provisions which would meet the recognition criteria under IFRS that were not recognized under Canadian GAAP.

Other differences between IFRS and Canadian GAAP exist in relation to the measurement of provisions, such as the methodology for determining the best estimate where there is a range of equally possible outcomes (IFRS uses the mid-point of the range, whereas Canadian GAAP uses the low end of the range), and the requirement under IFRS for provisions to be discounted where material.

We have reviewed our positions and concluded that there is no adjustment to our financial statements on transition to IFRS arising from the application of IFRS provisions recognition and measurement guidance.

Summary of Expected Adjustments to Financial Statements on Transition to IFRS

The below table provides a summary of expected adjustments to our balance sheet on transition to IFRS.



Reconciliation of Opening Balance Sheet
at Transition Date ($ millions) January 1, 2010
---------------

Total Assets per Canadian GAAP $ 2,923
Leases (a) 62
Employee Benefits (b) (10)
Asset Retirement Obligations (c) 1
Borrowing Costs (d) 8
--------------------------------------------------------------------------
Total Assets per IFRS $ 2,985
--------------------------------------------------------------------------

Total Liabilities per Canadian GAAP $ 1,687
Leases (a) 74
Employee Benefits (b) 6
Asset Retirement Obligations (c) 5
Borrowing Costs (d) 3
Uncertain Tax Positions (e) 5
Deferred Tax Impact of Transition Adjustments (f) (8)
Reclassification of Non-Controlling Interest (g) (136)
--------------------------------------------------------------------------
Total Liabilities per IFRS $ 1,637
--------------------------------------------------------------------------

Total Shareholders' Equity per Canadian GAAP $ 1,236
Leases (a) (12)
Employee Benefits (b) (16)
Asset Retirement Obligations (c) (4)
Borrowing Costs (d) 5
Uncertain Tax Positions (e) (5)
Deferred Tax Impact of Transition Adjustments (f) 8
Reclassification of Non-Controlling Interest (g) 136
--------------------------------------------------------------------------
Total Shareholders' Equity per IFRS $ 1,348
--------------------------------------------------------------------------

--------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity per IFRS $ 2,985
--------------------------------------------------------------------------



The items noted above in the reconciliation of the opening balance sheet from Canadian GAAP to IFRS are described below.

a. Leases

For a description of this reconciling item, see discussion under Significant Impacts on Transition to IFRS above.

b. Employee Benefits

For a description of this reconciling item, see discussion under IFRS 1 First-time Adoption of International Financial Reporting Standards above.

c. Asset Retirement Obligations

For a description of this reconciling item, see discussion under IFRS 1 First-time Adoption of International Financial Reporting Standards above.

d. Borrowing Costs

IAS 23 prescribes the accounting treatment and eligibility of borrowing costs. We have entered into interest rate swap contracts to hedge the variability in LIBOR-based interest payments on our Egypt limited recourse debt facilities. Under Canadian GAAP, cash settlements for these swaps during construction are recorded in Accumulated Other Comprehensive Income (AOCI). Under IFRS, the cash settlements during construction are recorded to Property, Plant and Equipment (PP&E). Accordingly, there is an increase to PP&E of approximately $8 million, an increase to AOCI for approximately $5 million (our 60% portion) and an increase in non-controlling interest of approximately $3 million as of January 1, 2010.

e. Uncertain Tax Positions

IAS 12 prescribes recognition and measurement criteria of a tax position taken or expected to be taken in a tax return. As at January 1, 2010, this resulted in an increase to income tax liabilities and a decrease to retained earnings of approximately $5 million in comparison to Canadian GAAP.

f. Deferred Tax Impact of Transition Adjustments

This adjustment represents the income tax effect of the adjustments related to accounting differences between Canadian GAAP and IFRS. As at January 1, 2010 this has resulted in a decrease to future income tax liabilities and an increase to retained earnings of approximately $8 million.

g. Reclassification of Non-Controlling Interest from Liabilities

We have a 60% interest in EMethanex, the Egyptian company through which we have developed the Egyptian methanol project. We account for this investment using consolidation accounting which results in 100% of the assets and liabilities of EMethanex being included in our financial statements. The other investors' interest in the project is presented as "non-controlling interest". Under Canadian GAAP, the non-controlling interest is classified as a liability whereas under IFRS the non-controlling interest is classified as equity, but presented separately from the parent's shareholder equity. At January 1, 2010, this reclassification results in a decrease to liabilities and an increase in equity of approximately $136 million.

The discussion above on IFRS 1 elections, significant accounting policy changes, and adjustments to the financial statements on transition to IFRS is provided to allow readers to obtain a better understanding of our IFRS changeover plan and the resulting potential effects on our consolidated financial statements. Readers are cautioned, however, that it may not be appropriate to use such information for any other purpose. IFRS employs a conceptual framework that is similar to Canadian GAAP; however, significant differences exist in certain matters of recognition, measurement and disclosure. In order to allow the users of the financial statements to better understand these differences and the resulting changes to our financial statements, we have provided a description of the significant IFRS 1 exemptions we intend to elect, a description of significant impacts related to the IFRS transition project as well as the above reconciliation between Canadian GAAP and IFRS for the total assets, total liabilities, and shareholders' equity. While this information does not represent the official adoption of IFRS, it provides an indication of the major differences identified to date based on the current IFRS guidance, relative to our Canadian GAAP accounting policies at transition. This discussion reflects our most recent assumptions and expectations; circumstances may arise, such as changes in IFRS, regulations or economic conditions, which could change these assumptions or expectations. Any further changes to the election of IFRS 1 exemptions, the selection of IFRS accounting policies and any related adjustments to the financial statements would be subject to approval by the Audit, Finance and Risk Committee and audit by KPMG LLP, prior to being finalized. Accordingly, the discussion above is subject to change.

ADDITIONAL INFORMATION - SUPPLEMENTAL NON-GAAP MEASURES

In addition to providing measures prepared in accordance with Canadian generally accepted accounting principles (GAAP), we present certain supplemental non-GAAP measures. These are Adjusted EBITDA, operating income, cash flows from operating activities before changes in non-cash working capital and diluted net income per common share before unusual item. These measures do not have any standardized meaning prescribed by Canadian GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. We believe these measures are useful in evaluating the operating performance and liquidity of the Company's ongoing business. These measures should be considered in addition to, and not as a substitute for, net income, cash flows and other measures of financial performance and liquidity reported in accordance with Canadian GAAP.

Adjusted EBITDA

This supplemental non-GAAP measure is provided to assist readers in determining our ability to generate cash from operations. We believe this measure is useful in assessing performance and highlighting trends on an overall basis. We also believe Adjusted EBITDA is frequently used by securities analysts and investors when comparing our results with those of other companies. Adjusted EBITDA differs from the most comparable GAAP measure, cash flows from operating activities, primarily because it does not include changes in non-cash working capital, other cash payments related to operating activities, stock-based compensation expense, other non-cash items, interest expense, interest and other income (expense), and current income taxes.

The following table shows a reconciliation of cash flows from operating activities to Adjusted EBITDA:



Three Months Ended Years Ended
-------------------------------- ----------------------
Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
($ thousands) 2010 2010 2009 2010 2009
-------------------------------------------------- ----------------------
Cash flows
from operating
activities $ 10,403 $ 47,986 $ 35,733 $ 152,882 $ 110,257
Add (deduct):
Changes in
non-cash working
capital 66,614 5,161 38,482 98,706 18,253
Other cash
payments 163 1,766 327 6,051 11,302
Stock-based
compensation
expense (17,468) (6,913) (4,598) (31,496) (12,527)
Other non-cash
items 707 (4,303) (1,374) (7,897) (7,639)
Interest expense 5,875 6,027 6,217 24,238 27,370
Interest and
other income
(expense) (3,752) 1,187 (18) (2,779) 403
Current
income taxes 8,782 6,379 (1,880) 27,033 (5,592)
-------------------------------------------------- ----------------------
Adjusted EBITDA $ 71,324 $ 57,290 $ 72,889 $ 266,738 $ 141,827
-------------------------------------------------- ----------------------



The following table shows a reconciliation from net income to net income before unusual item and the calculation of diluted earnings per share before unusual item:



Three Months Ended Years Ended
-------------------------------- ----------------------
Dec 31 Sep 30 Dec 31 Dec 31 Dec 31
($ thousands) 2010 2010 2009 2010 2009
-------------------------------------------------- ----------------------
Net income $ 27,867 $ 32,810 $ 25,718 $ 101,733 $ 738
Gain on sale of
Kitimat assets - (22,223) - (22,223) -
-------------------------------------------------- ----------------------
Net income before
unusual item $ 27,867 $ 10,587 $ 25,718 $ 79,510 $ 738
-------------------------------------------------- ----------------------
Diluted weighted
average number
of common
shares 93,951,536 93,330,104 93,069,657 93,503,568 92,688,510
Diluted net
income per
common share
before unusual
item 0.30 0.11 0.28 0.85 0.01



Operating Income and Cash Flows from Operating Activities before Changes in Non-Cash Working Capital

Operating income and cash flows from operating activities before changes in non-cash working capital are reconciled to Canadian GAAP measures in our consolidated statements of income and consolidated statements of cash flows, respectively.

QUARTERLY FINANCIAL DATA (UNAUDITED)

A summary of selected financial information for the prior eight quarters is as follows:



Three Months Ended
-----------------------------------------------
($ thousands, except per Dec 31 Sep 30 Jun 30 Mar 31
share amounts) 2010 2010 2010 2010
--------------------------------------------------------------------------

Revenue $ 570,337 $ 480,997 $ 448,543 $ 466,706
Net income 27,867 32,810 11,736 29,320
Net income before
unusual item 27,867 10,587 11,736 29,320
Basic net income per
common share 0.30 0.36 0.13 0.32
Basic net income per
common share before
unusual item 0.30 0.11 0.13 0.32
Diluted net income
per common share 0.30 0.35 0.13 0.31
Diluted net income
per common share before
unusual item 0.30 0.11 0.13 0.31
--------------------------------------------------------------------------

Three Months Ended
-----------------------------------------------
($ thousands, except per Dec 31 Sep 30 Jun 30 Mar 31
share amounts) 2009 2009 2009 2009
--------------------------------------------------------------------------

Revenue $ 381,729 $ 316,932 $ 245,501 $ 254,007
Net income (loss) 25,718 (831) (5,743) (18,406)
Net income (loss) before
unusual item 25,718 (831) (5,743) (18,406)
Basic net income (loss)
per common share 0.28 (0.01) (0.06) (0.20)
Basic net income (loss)
per common share before
unusual item 0.28 (0.01) (0.06) (0.20)
Diluted net income (loss)
per common share 0.28 (0.01) (0.06) (0.20)
Diluted net income (loss)
per common share before
unusual item 0.28 (0.01) (0.06) (0.20)
--------------------------------------------------------------------------



FORWARD-LOOKING INFORMATION WARNING

This Fourth Quarter 2010 Management's Discussion and Analysis ("MD&A") as well as comments made during the Fourth Quarter 2010 investor conference call contain forward-looking statements with respect to us and the chemical industry. Statements that include the words "believes", "expects", "may", "will", "should", "seeks", "intends", "plans", "estimates", "anticipates", or the negative version of those words or other comparable terminology and similar statements of a future or forward-looking nature identify forward-looking statements.

More particularly and without limitation, any statements regarding the following are forward looking statements:



-- expected demand for methanol and its derivatives,
-- expected new methanol supply and timing for start-up of the same,
-- expected shut downs (either temporary or permanent) or re-starts of
existing methanol supply (including our own facilities), including,
without limitation, timing of planned maintenance outages,
-- expected methanol and energy prices,
-- anticipated production rates of our plants, including our Chilean
facilities and the new methanol plant in Egypt expected to ramp-up
production over the first quarter of 2011,
-- expected levels of natural gas supply to our plants,
-- capital committed by third parties towards future natural gas
exploration in Chile and New Zealand, anticipated activities and
results of natural gas exploration and development in Chile and New
Zealand and timing of same,
-- expected capital expenditures, including those to support natural gas
exploration and development in Chile and New Zealand and the restart of
our idled methanol facilities,
-- expected operating costs, including natural gas feedstock costs and
logistics costs,
-- expected tax rates,
-- expected cash flows and earnings capability,
-- anticipated completion date of, and cost to complete, our methanol
project in Egypt and the Medicine Hat restart project,
-- availability of committed credit facilities and other financing,
-- shareholder distribution strategy and anticipated distributions to
shareholders,
-- commercial viability of, or ability to execute, future projects or
capacity expansions,
-- financial strength and ability to meet future financial commitments,
-- expected global or regional economic activity (including industrial
production levels), and
-- expected actions of governments, gas suppliers, courts and tribunals,
or other third parties.



We believe that we have a reasonable basis for making such forward-looking statements. The forward-looking statements in this document are based on our experience, our perception of trends, current conditions and expected future developments as well as other factors. Certain material factors or assumptions were applied in drawing the conclusions or making the forecasts or projections that are included in these forward-looking statements, including, without limitation, future expectations and assumptions concerning the following:



-- supply of, demand for, and price of, methanol, methanol derivatives,
natural gas, oil and oil derivatives,
-- production rates of our facilities, including our Chilean facilities and
the new methanol plant in Egypt expected to ramp-up production in the
first quarter of 2011,
-- success of natural gas exploration in Chile and New Zealand,
-- receipt or issuance of third party consents or approvals, including
without limitation, governmental approvals related to natural gas
exploration rights, rights to purchase natural gas or the establishment
of new fuel standards,
-- operating costs including natural gas feedstock and logistics costs,
capital costs, tax rates, cash flows, foreign exchange rates and
interest rates,
-- timing of completion and cost of our methanol project in Egypt and the
Medicine Hat restart project,
-- availability of committed credit facilities and other financing,
-- global and regional economic activity (including industrial production
levels),
-- absence of a material negative impact from major natural disasters or
global pandemics,
-- absence of a material negative impact from changes in laws or
regulations, and
-- performance of contractual obligations by customers, suppliers and other
third parties.



However, forward-looking statements, by their nature, involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The risks and uncertainties primarily include those attendant with producing and marketing methanol and successfully carrying out major capital expenditure projects in various jurisdictions, including without limitation:



-- conditions in the methanol and other industries, including fluctuations
in supply, demand and price for methanol and its derivatives, including
demand for methanol for energy uses,
-- the price of natural gas, oil and oil derivatives,
-- the success of natural gas exploration and development activities in
southern Chile and New Zealand and our ability to obtain any additional
gas in those regions or other regions on commercially acceptable terms,
-- the timing of start-up and cost to complete our new methanol joint
venture project in Egypt,
-- the ability to successfully carry out corporate initiatives and
strategies,
-- actions of competitors and suppliers,
-- actions of governments and governmental authorities including
implementation of policies or other measures that could impact the
supply or demand for methanol or its derivatives,
-- changes in laws or regulations,
-- import or export restrictions, anti-dumping measures, increases in
duties, taxes and government royalties, and other actions by governments
that may adversely affect our operations,
-- world-wide economic conditions, and
-- other risks described in our 2009 Management's Discussion and Analysis
and this Fourth Quarter 2010 Management's Discussion and Analysis.



Having in mind these and other factors, investors and other readers are cautioned not to place undue reliance on forward-looking statements. They are not a substitute for the exercise of one's own due diligence and judgment. The outcomes anticipated in forward-looking statements may not occur and we do not undertake to update forward-looking statements except as required by applicable securities laws.

HOW WE ANALYZE OUR BUSINESS

Our operations consist of a single operating segment - the production and sale of methanol. We review our results of operations by analyzing changes in the components of our adjusted earnings before interest, taxes, depreciations and amortization (Adjusted EBITDA) (refer to the Supplemental Non-GAAP Measures section for a reconciliation to the most comparable GAAP measure), interest expense, interest and other income, and income taxes. In addition to the methanol that we produce at our facilities ("Methanex-produced methanol"), we also purchase and re-sell methanol produced by others ("purchased methanol") and we sell methanol on a commission basis. We analyze the results of all methanol sales together. The key drivers of change in our Adjusted EBITDA are average realized price, cash costs and sales volume.

The price, cash cost and volume variances included in our Adjusted EBITDA analysis are defined and calculated as follows:

PRICE

The change in Adjusted EBITDA as a result of changes in average realized price is calculated as the difference from period to period in the selling price of methanol multiplied by the current period total methanol sales volume excluding commission sales volume plus the difference from period to period in commission revenue.

COST

The change in our Adjusted EBITDA as a result of changes in cash costs is calculated as the difference from period to period in cash costs per tonne multiplied by the current period total methanol sales volume excluding commission sales volume in the current period. The cash costs per tonne is the weighted average of the cash cost per tonne of Methanex-produced methanol and the cash cost per tonne of purchased methanol. The cash cost per tonne of Methanex-produced methanol includes absorbed fixed cash costs per tonne and variable cash costs per tonne. The cash cost per tonne of purchased methanol consists principally of the cost of methanol itself. In addition, the change in our Adjusted EBITDA as a result of changes in cash costs includes the changes from period to period in unabsorbed fixed production costs, consolidated selling, general and administrative expenses and fixed storage and handling costs.

VOLUME

The change in Adjusted EBITDA as a result of changes in sales volume is calculated as the difference from period to period in total methanol sales volume excluding commission sales volumes multiplied by the margin per tonne for the prior period. The margin per tonne for the prior period is the weighted average margin per tonne of Methanex-produced methanol and purchased methanol. The margin per tonne for Methanex-produced methanol is calculated as the selling price per tonne of methanol less absorbed fixed cash costs per tonne and variable cash costs per tonne. The margin per tonne for purchased methanol is calculated as the selling price per tonne of methanol less the cost of purchased methanol per tonne.

We also sell methanol on a commission basis. Commission sales represent volumes marketed on a commission basis related to the 36.9% of the Atlas methanol facility in Trinidad that we do not own.



Methanex Corporation Consolidated
Statements of Income (unaudited)
(thousands of U.S. dollars, except number of common
shares and per share amounts)

Three Months Ended Years Ended
---------------------- ----------------------
Dec 31 Dec 31 Dec 31 Dec 31
2010 2009 2010 2009
--------------------------------------------------------------------------

Revenue $ 570,337 $ 381,729 $ 1,966,583 $1,198,169
Cost of sales and
operating expenses (499,013) (308,840) (1,699,845) (1,056,342)
Depreciation and
amortization (30,165) (31,993) (131,381) (117,590)
Gain on sale of
Kitimat assets - - 22,223 -
--------------------------------------------------------------------------
Operating income
before undernoted items 41,159 40,896 157,580 24,237
Interest expense (note 6) (5,875) (6,217) (24,238) (27,370)
Interest and other
income (expense) 3,752 18 2,779 (403)
--------------------------------------------------------------------------
Income (loss) before
income taxes 39,036 34,697 136,121 (3,536)
Income tax (expense)
recovery:
Current (8,782) 1,880 (27,033) 5,592
Future (2,387) (10,859) (7,355) (1,318)
--------------------------------------------------------------------------
(11,169) (8,979) (34,388) 4,274
--------------------------------------------------------------------------
Net income $ 27,867 $ 25,718 $ 101,733 $ 738
--------------------------------------------------------------------------
--------------------------------------------------------------------------

Net income per common share:
Basic $ 0.30 $ 0.28 $ 1.10 $ 0.01
Diluted $ 0.30 $ 0.28 $ 1.09 $ 0.01

Weighted average
number of common
shares outstanding:
Basic 92,347,561 92,108,242 92,218,320 92,063,371
Diluted 93,951,536 93,069,657 93,503,568 92,688,510

Number of common
shares outstanding
at period end 92,632,022 92,108,242 92,632,022 92,108,242

See accompanying notes to consolidated financial statements.

Methanex Corporation
Consolidated Balance Sheets (unaudited)
(thousands of U.S. dollars)

Dec 31 Dec 31
2010 2009
--------------------------------------------------------------------------

ASSETS
Current assets:
Cash and cash equivalents $ 193,794 $ 169,788
Receivables 320,027 257,418
Inventories 230,322 171,554
Prepaid expenses 26,877 23,893
--------------------------------------------------------------------------
771,020 622,653
Property, plant and equipment (note 3) 2,213,836 2,183,787
Other assets 85,303 116,977
--------------------------------------------------------------------------
$ 3,070,159 $ 2,923,417
--------------------------------------------------------------------------
--------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 250,730 $ 232,924
Current maturities on long-term debt (note 5) 49,965 29,330
Current maturities on other long-term
liabilities 13,395 9,350
--------------------------------------------------------------------------

314,090 271,604
Long-term debt (note 5) 896,976 884,914
Other long-term liabilities 128,502 97,185
Future income tax liabilities 307,865 300,510
Non-controlling interest 146,099 133,118
Shareholders' equity:
Capital stock 440,092 427,792
Contributed surplus 26,308 27,007
Retained earnings 850,691 806,158
Accumulated other comprehensive loss (40,464) (24,871)
--------------------------------------------------------------------------
1,276,627 1,236,086
--------------------------------------------------------------------------
$ 3,070,159 $ 2,923,417
--------------------------------------------------------------------------
--------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.

Methanex Corporation Consolidated
Consolidated Statements of Shareholders' Equity (unaudited)
(thousands of U.S. dollars, except number of common
shares and per share amounts)

Accum-
ulated
Number Retain- Other Total
of Contri- ed Compre- Share-
Common Capital buted Earn- hensive holders'
Shares Stock Surplus ings Loss Equity
---------------------------------------------------------------------------
Balance,
December 31,
2008 92,031,392 $427,265 $22,669 $862,507 $(24,025) $1,288,416
Net income - - - 738 - 738
Compensation
expense
recorded
for stock
options - - 4,440 - - 4,440
Issue of
shares on
exercise of
stock
options 76,850 425 - - - 425
Reclass-
ification
of grant
date fair
value on
exercise
of stock
options - 102 (102) - - -
Dividend
payments - - - (57,087) - (57,087)
Other
compre-
hensive
loss - - - - (846) (846)
---------------------------------------------------------------------------
Balance,
December 31,
2009 92,108,242 427,792 27,007 806,158 (24,871) 1,236,086
Net income - - - 73,866 - 73,866
Compensation
expense
recorded
for stock
options - - 1,804 - - 1,804
Issue of
shares on
exercise
of stock
options 124,975 1,400 - - - 1,400
Reclass-
ification
of grant
date fair
value on
exercise
of stock
options - 522 (522) - - -
Dividend
payments - - - (42,869) - (42,869)
Other
compre-
hensive
loss - - - - (17,965) (17,965)
---------------------------------------------------------------------------
Balance,
September 30,
2010 92,233,217 429,714 28,289 837,155 (42,836) 1,252,322
Net income - - - 27,867 - 27,867
Compensation
expense
recorded
for stock
options - - 560 - - 560
Issue of
shares on
exercise
of stock
options 398,805 7,837 - - - 7,837
Reclass-
ification
of grant
date fair
value on
exercise
of stock
options - 2,541 (2,541) - - -
Dividend
payments - - - (14,331) - (14,331)
Other
compre-
hensive
income - - - - 2,372 2,372
---------------------------------------------------------------------------
Balance,
December 31,
2010 92,632,022 $440,092 $26,308 $850,691 $(40,464) $1,276,627
---------------------------------------------------------------------------
---------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.

Consolidated Statements of Comprehensive Income (Loss) (unaudited)
(thousands of U.S. dollars)
Three Months Ended Years Ended
-------------------- --------------------
Dec 31 Dec 31 Dec 31 Dec 31
2010 2009 2010 2009
---------------------------------------------------------------------------
Net income $ 27,867 $ 25,718 $ 101,733 $ 738
Other comprehensive
income (loss),
net of tax:
Change in fair
value of forward
exchange contracts - 118 - 36
Change in fair value of
interest rate swap
contracts (note 11) 2,372 229 (15,593) (882)
---------------------------------------------------------------------------
2,372 347 (15,593) (846)
---------------------------------------------------------------------------
Comprehensive
income (loss) $ 30,239 $ 26,065 $ 86,140 $ (108)
---------------------------------------------------------------------------
---------------------------------------------------------------------------

See accompanying notes to consolidated financial statements.

Methanex Corporation Consolidated
Consolidated Statements of Cash Flows (unaudited)
(thousands of U.S. dollars)

Three Months Ended Years Ended
------------------ -------------------
Dec 31 Dec 31 Dec 31 Dec 31
2010 2009 2010 2009
---------------------------------------------------------------------------

CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $ 27,867 $ 25,718 $101,733 $ 738
Add (deduct) non-cash items:
Depreciation and amortization 30,165 31,993 131,381 117,590
Gain on sale of Kitimat assets - - (22,223) -
Future income taxes 2,387 10,859 7,355 1,318
Stock-based compensation
expense 17,468 4,598 31,496 12,527
Other (707) 1,374 7,897 7,639
Other cash payments, including
stock-based compensation (163) (327) (6,051) (11,302)
---------------------------------------------------------------------------
Cash flows from operating
activities before undernoted 77,017 74,215 251,588 128,510
Changes in non-cash working
capital (note 10) (66,614) (38,482) (98,706) (18,253)
---------------------------------------------------------------------------
10,403 35,733 152,882 110,257
---------------------------------------------------------------------------

CASH FLOWS FROM FINANCING
ACTIVITIES
Dividend payments (14,331) (14,277) (57,200) (57,087)
Proceeds from limited recourse
debt - 14,000 67,515 151,378
Equity contribution by
non-controlling interest 7,429 6,235 23,376 45,103
Repayment of limited recourse
debt (7,628) (7,329) (30,991) (15,282)
Proceeds on issue of shares on
exercise of stock options 7,837 - 9,237 425
Repayment of other long-term
liabilities (1,421) (1,189) (21,681) (11,157)
Financing costs - (217) - (1,949)
---------------------------------------------------------------------------
(8,114) (2,777) (9,744) 111,431
---------------------------------------------------------------------------

CASH FLOWS FROM INVESTING
ACTIVITIES
Proceeds from sale of assets 31,771 - 31,771 -
Property, plant and equipment (21,972) (10,713) (58,154) (60,906)
Egypt plant under construction (21,138) (38,890) (85,996) (261,646)
Oil and gas assets (5,403) (5,282) (24,233) (22,840)
GeoPark repayment (financing) 14,531 (13,582) 20,227 (9,285)
Changes in project debt reserve
accounts 372 185 372 5,229
Other assets (307) - (769) (2,454)
Changes in non-cash working
capital related to investing
activities (note 10) 1,812 7,678 (2,350) (28,428)
---------------------------------------------------------------------------
(334) (60,604) (119,132) (380,330)
---------------------------------------------------------------------------
Increase (decrease) in cash and
cash equivalents 1,955 (27,648) 24,006 (158,642)
Cash and cash equivalents,
beginning of period 191,839 197,436 169,788 328,430
---------------------------------------------------------------------------
Cash and cash equivalents,
end of period $ 193,794 $ 169,788 $ 193,794 $ 169,788
---------------------------------------------------------------------------
---------------------------------------------------------------------------

SUPPLEMENTARY CASH FLOW
INFORMATION
Interest paid $ 5,326 $ 4,669 $ 57,880 $ 52,767
Income taxes paid, net of
amounts refunded $ 159 $ (2,723) $ 9,090 $ 6,363

See accompanying notes to consolidated financial statements.



Methanex Corporation

Notes to Consolidated Financial Statements (unaudited)

Except where otherwise noted, tabular dollar amounts are stated in thousands of U.S. dollars.

1. Basis of presentation:

These interim consolidated financial statements are prepared in accordance with generally accepted accounting principles in Canada on a basis consistent with those followed in the most recent annual consolidated financial statements. These accounting principles are different in some respects from those generally accepted in the United States and the significant differences are described and reconciled in Note 13. These interim consolidated financial statements do not include all note disclosures required by Canadian generally accepted accounting principles for annual financial statements, and therefore should be read in conjunction with the annual consolidated financial statements included in the Methanex Corporation 2009 Annual Report.

2. Inventories:

Inventories are valued at the lower of cost, determined on a first-in first-out basis, and estimated net realizable value. The amount of inventories included in cost of sales and operating expense and depreciation and amortization during the three months and year ended December 31, 2010 was $452 million (2009 - $295 million) and $1,604 million (2009 - $997 million), respectively.

3. Property, plant and equipment:



Accumulated Net Book
Cost Depreciation Value
--------------------------------------------------------------------------
--------------------------------------------------------------------------
December 31, 2010
Plant and equipment $ 2,618,802 $ 1,475,323 $ 1,143,479
Egypt plant under construction 942,045 - 942,045
Oil and gas assets 92,634 20,092 72,542
Other 116,203 60,433 55,770
--------------------------------------------------------------------------
$ 3,769,684 $ 1,555,848 $ 2,213,836
--------------------------------------------------------------------------
December 31, 2009
Plant and equipment $ 2,591,480 $ 1,384,939 $ 1,206,541
Egypt plant under construction 854,164 - 854,164
Oil and gas assets 68,402 4,560 63,842
Other 127,623 68,383 59,240
--------------------------------------------------------------------------
$ 3,641,669 $ 1,457,882 $ 2,183,787
--------------------------------------------------------------------------



4. Interest in Atlas joint venture:

The Company has a 63.1% joint venture interest in Atlas Methanol Company (Atlas). Atlas owns a 1.7 million tonne per year methanol production facility in Trinidad. Included in the consolidated financial statements are the following amounts representing the Company's proportionate interest in Atlas:



Dec 31 Dec 31
Consolidated Balance Sheets 2010 2009
--------------------------------------------------------------------------
Cash and cash equivalents $ 10,675 $ 8,252
Other current assets 80,493 72,667
Property, plant and equipment 231,978 240,290
Other assets 12,548 12,920
Accounts payable and accrued liabilities 24,049 22,380
Long-term debt, including current maturities (note 5) 79,577 93,155
Future income tax liabilities 20,571 18,660
--------------------------------------------------------------------------

Three Months Ended Years Ended
------------------ --------------------
Consolidated Statements Dec 31 Dec 31 Dec 31 Dec 31
of Income 2010 2009 2010 2009
--------------------------------------------------- --------------------
Revenue $ 56,008 $ 55,305 $180,314 $194,314
Expenses (48,662) (44,337) (165,282) (158,611)
--------------------------------------------------- --------------------
Income before income taxes 7,346 10,968 15,032 35,703
Income tax expense (1,679) (3,204) (3,469) (6,127)
--------------------------------------------------- --------------------
Net income $ 5,667 $ 7,764 $ 11,563 $ 29,576
--------------------------------------------------- --------------------

Three Months Ended Years Ended
------------------ --------------------
Consolidated Statements Dec 31 Dec 31 Dec 31 Dec 31
of Cash Flows 2010 2009 2010 2009
--------------------------------------------------- --------------------
Cash inflows from
operating activities $ 16,397 $ (1,950) $ 25,080 $ 36,166
Cash outflows from
financing activities (7,016) (7,016) (14,032) (14,032)
Cash inflows (outflows)
from investing activities (1,881) 185 (8,625) (3,568)
--------------------------------------------------- --------------------



5. Long-term debt:



Dec 31 Dec 31
2010 2009
--------------------------------------------------------------------------
Unsecured notes
8.75% due August 15, 2012 $ 199,112 $ 198,627
6.00% due August 15, 2015 148,908 148,705
--------------------------------------------------------------------------
348,020 347,332
Atlas limited recourse debt facilities 79,577 93,155
Egypt limited recourse debt facilities 499,706 461,570
Other limited recourse debt facilities 19,638 12,187
--------------------------------------------------------------------------
946,941 914,244
Less current maturities (49,965) (29,330)
--------------------------------------------------------------------------
$ 896,976 $ 884,914
--------------------------------------------------------------------------



The Company has limited recourse debt of $530 million for its joint venture project to construct a 1.3 million tonne per year methanol facility in Egypt. At December 31, 2010, the Company has fully drawn on the Egypt limited recourse debt facilities and on September 30, 2010, commenced repayment of the facilities by making the first of 24 semi-annual principal repayments.

6. Interest expense:



Three Months Ended Years Ended
---------------------- ---------------------
Dec 31 Dec 31 Dec 31 Dec 31
2010 2009 2010 2009
---------------------------------------------------- ---------------------
Interest expense before
capitalized interest $ 15,684 $ 15,378 $ 62,313 $ 59,800
Less: capitalized interest
related to Egypt project (9,809) (9,161) (38,075) (32,430)
---------------------------------------------------- ---------------------
Interest expense $ 5,875 $ 6,217 $ 24,238 $ 27,370
---------------------------------------------------- ---------------------



Interest during construction of the Egypt methanol facility is capitalized until the plant is substantially complete and ready for productive use. The Company has secured limited recourse debt of $530 million for its joint venture project to construct a 1.3 million tonne per year methanol facility in Egypt. The Company has entered into interest rate swap contracts to swap the LIBOR-based interest payments for an average aggregated fixed rate of 4.8% plus a spread on approximately 75% of the Egypt limited recourse debt facilities for the period to March 31, 2015. For the three months and year ended December 31, 2010, interest costs related to this project of $9.8 million (2009 - $9.2 million) and $38.1 million (2009 - $32.4 million) related to this project were capitalized, inclusive of interest rate swaps.

7. Net income per common share:

A reconciliation of the weighted average number of common shares outstanding is as follows:



Three Months Ended Years Ended
---------------------- ----------------------
Dec 31 Dec 31 Dec 31 Dec 31
2010 2009 2010 2009
---------------------------------------------------- ----------------------
Denominator for basic net
income per common share 92,347,561 92,108,242 92,218,320 92,063,371
Effect of dilutive
stock options 1,603,975 961,415 1,285,248 625,139
---------------------------------------------------- ----------------------
Denominator for diluted net
income per common share 93,951,536 93,069,657 93,503,568 92,688,510
---------------------------------------------------- ----------------------



8. Stock-based compensation:

a) Stock options:

(i) Outstanding stock options:

Common shares reserved for outstanding stock options at December 31, 2010:



Options Denominated in CAD Options Denominated in USD
-------------------------- --------------------------
Weighted Weighted
Number of Average Number of Average
Stock Exercise Stock Exercise
Options Price Options Price
----------------------------------------------- --------------------------
Outstanding at
December 31, 2009 55,350 $ 7.58 4,998,242 $ 18.77
Granted - - 89,250 25.22
Exercised (10,000) 3.29 (114,975) 11.89
Cancelled (7,500) 3.29 (32,155) 15.52
----------------------------------------------- --------------------------
Outstanding at
September 30, 2010 37,850 $ 9.56 4,940,362 $ 19.07
Granted - - - -
Exercised (35,600) 9.56 (363,205) 20.65
Cancelled - - (2,900) 13.19
----------------------------------------------- --------------------------
Outstanding at
December 31, 2010 2,250 $ 9.56 4,574,257 $ 18.95
----------------------------------------------- --------------------------



Information regarding the stock options outstanding at December 31, 2010 is as follows:



Options Outstanding Options Exercisable
at December 31, 2010 at December 31, 2010
---------------------------------- ---------------------
Weighted
Average Number of Weighted Number of Weighted
Remaining Stock Average Stock Average
Range of Contractual Options Exercise Options Exercise
Exercise Prices Life (Years) Outstanding Price Exercisable Price
---------------------------------------------------- ---------------------
Options
denominated
in CAD 0.2 2,250 $ 9.56 2,250 $ 9.56
---------------------------------------------------------------------------

Options
denominated
in USD
$6.33 to 11.56 4.9 1,356,780 $ 6.53 479,570 $ 6.90
$17.85 to 22.52 2.0 1,256,000 20.27 1,256,000 20.27
$23.92 to 28.43 3.8 1,961,477 26.69 1,529,168 26.39
---------------------------------------------------------------------------
3.6 4,574,257 $ 18.95 3,264,738 $ 21.17
---------------------------------------------------------------------------



(ii) Compensation expense related to stock options:

For the three months and year ended December 31, 2010, compensation expense related to stock options included in cost of sales and operating expenses was $0.6 million (2009 - $0.7 million) and $2.4 million (2009 - $4.4 million), respectively.

b) Stock appreciation rights and tandem stock appreciation rights:

During 2010, the Company's stock option plan was amended to include tandem stock appreciation rights ('TSARs') and a new plan was introduced for stock appreciation rights ('SARs'). A SAR gives the holder a right to receive a cash payment equal to the amount the market price of the Company's common shares exceeds the exercise price. A TSAR gives the holder the choice between exercising a regular stock option or surrendering the option for a cash payment equal to the amount the market price of the Company's common shares exceeds the exercise price. All SARs and TSARs granted have a maximum term of seven years with one-third vesting each year after the date of grant.

(i) Outstanding SARs and TSARs:

SARs and TSARs outstanding at December 31, 2010:



SARs TSARs
Denominated in USD Denominated in USD
------------------------ ---------------------
Number of Exercise Number of Exercise
Units Price Units Price
--------------------------------------------------- ---------------------
Outstanding at
December 31, 2009 - $ - - $ -
Granted 394,065 25.22 735,505 25.19
Exercised - - - -
Cancelled (3,000) 25.22 - -
---------------------------------------------------------------------------
Outstanding at
September 30, 2010 391,065 $ 25.22 735,505 $ 25.19
Granted - - - -
Exercised - - - -
Cancelled (2,100) 25.22 - -
---------------------------------------------------------------------------
Outstanding at
December 31, 2010(1) 388,965 $ 25.22 735,505 $ 25.19
---------------------------------------------------------------------------
(1) As at December 31, 2010 no SARs or TSARs outstanding are exerciseable.
The Company has common shares reserved for outstanding TSARs.



(ii) Compensation expense related to SARs and TSARs:

Compensation expense for SARs and TSARs is initially measured based on their intrinsic value and is recognized over the related service period. The intrinsic value is measured by the amount the market price of the Company's common shares exceeds the exercise price of a unit. Changes in intrinsic value are recognized in earnings for the proportion of the service that has been rendered at each reporting date. The intrinsic value at December 31, 2010 was $5.8 million compared with the recorded liability of $3.4 million. The difference between the intrinsic value and the recorded liability of $2.4 million will be recognized over the weighted average remaining service period of approximately 2.2 years. For the three months and year ended December 31, 2010, compensation expense related to SARs and TSARs included in cost of sales and operating expenses was $3.4 million (2009 - nil).

c) Deferred, restricted and performance share units:

Deferred, restricted and performance share units outstanding at December 31, 2010 are as follows:



Number of Number of Number of
Deferred Restricted Performance
Share Units Share Units Share Units
---------------------------------------------------------------------------
Outstanding at
December 31, 2009 505,176 22,478 1,078,812
Granted 47,902 29,500 404,630
Granted in-lieu of dividends 11,313 1,032 23,067
Redeemed (10,722) - (326,840)
Cancelled - - (10,099)
---------------------------------------------------------------------------
Outstanding at
September 30, 2010 553,669 53,010 1,169,570
Granted 699 - -
Granted in-lieu of dividends 2,819 233 5,848
Redeemed - (6,639) -
Cancelled - - (5,801)
---------------------------------------------------------------------------
Outstanding at
December 31, 2010 557,187 46,604 1,169,617
---------------------------------------------------------------------------



Compensation expense for deferred, restricted and performance share units is initially measured at fair value based on the market value of the Company's common shares and is recognized over the related service period. Changes in fair value are recognized in earnings for the proportion of the service that has been rendered at each reporting date. The fair value of deferred, restricted and performance share units at December 31, 2010 was $53.8 million compared with the recorded liability of $43.8 million. The difference between the fair value and the recorded liability of $10.0 million will be recognized over the weighted average remaining service period of approximately 1.5 years.

For the three months and year ended December 31, 2010, compensation expense related to deferred, restricted and performance share units included in cost of sales and operating expenses was $13.5 million (2009 - $3.9 million) and $25.7 million (2009 - $8.2 million), respectively. This included an expense of $11.7 million (2009 - $2.4 million) and $16.3 million (2009 - $0.9 million) related to the effect of the change in the Company's share price for the three months and year ended December 31, 2010, respectively.

9. Retirement plans:

Total net pension expense for the Company's defined benefit and defined contribution pension plans during the three months and year ended December 31, 2010 was $2.4 million (2009 - $2.7 million) and $9.3 million (2009 - $10.7 million), respectively.

10. Changes in non-cash working capital:

The change in cash flows related to changes in non-cash working capital for the three months and year ended December 31, 2010 were as follows:



Three Months Ended Years Ended
------------------------ ------------------------
Dec 31 Dec 31 Dec 31 Dec 31
2010 2009 2010 2009
------------------------------------------------- ------------------------
Decrease (increase) in
non-cash working capital:
Receivables $ (1,952) $ (14,660) $ (62,609) $ (43,999)
Inventories (44,608) (54,937) (58,768) 6,083
Prepaid expenses (6,540) (1,630) (2,984) (7,053)
Accounts payable and
accrued liabilities 14,331 38,279 17,806 (2,445)
------------------------------------------------- ------------------------
(38,769) (32,948) (106,555) (47,414)
Adjustments for items
not having a cash effect (26,033) 2,144 5,499 733
------------------------------------------------- ------------------------
Changes in non-cash
working capital having
a cash effect $ (64,802) $ (30,804) $(101,056) $ (46,681)
------------------------------------------------- ------------------------

These changes relate to
the following activities:
Operating $ (66,614) $ (38,482) $ (98,706) $ (18,253)
Investing 1,812 7,678 (2,350) (28,428)
------------------------------------------------- ------------------------
Changes in non-cash
working capital $ (64,802) $ (30,804) $(101,056) $ (46,681)
------------------------------------------------- ------------------------



11. Financial instruments:

The following table provides the carrying value of each category of financial assets and liabilities and the related balance sheet item:



Dec 31 Dec 31
2010 2009
---------------------------------------------------------------------------
Financial assets:
Held for trading financial assets:
Cash and cash equivalents $ 193,794 $ 169,788
Project debt reserve accounts
included in other assets 12,548 12,920

Loans and receivables:
Receivables, excluding current
portion of GeoPark financing 316,070 249,332
GeoPark financing, including
current portion 25,868 46,055
---------------------------------------------------------------------------
$ 543,437 $ 478,095
---------------------------------------------------------------------------
Financial liabilities:
Other financial liabilities:
Accounts payable and accrued
liabilities $ 250,730 $ 232,924
Long-term debt, including
current portion 946,941 914,244

Held for trading financial liabilities:
Derivative instruments designated
as cash flow hedges 43,488 33,185
Derivative instruments - 99
---------------------------------------------------------------------------
$ 1,241,159 $ 1,180,452
---------------------------------------------------------------------------



At December 31, 2010, all of the Company's financial instruments are recorded on the balance sheet at amortized cost with the exception of cash and cash equivalents, derivative financial instruments and project debt reserve accounts included in other assets which are recorded at fair value.

The Egypt limited recourse debt facilities bear interest at LIBOR plus a spread. The Company has entered into interest rate swap contracts to swap the LIBOR-based interest payments for an average aggregated fixed rate of 4.8% plus a spread on approximately 75% of the Egypt limited recourse debt facilities for the period September 28, 2007 to March 31, 2015. The Company has designated these interest rate swaps as cash flow hedges.

These interest rate swaps had outstanding notional amounts of $368 million as at December 31, 2010. The notional amounts decrease over the expected repayment period. At December 31, 2010, these interest rate swap contracts had a negative fair value of $43.5 million (December 31, 2009 - $33.2 million) recorded in other long-term liabilities. The fair value of these interest rate swap contracts will fluctuate until maturity and changes in their fair values have been recorded in other comprehensive income.

12. Contingent liability:

The Board of Inland Revenue of Trinidad and Tobago (BIR) issued an assessment in 2009 against our wholly owned subsidiary, Methanex Trinidad (Titan) Unlimited, in respect of the 2003 financial year. The assessment relates to the deferral of tax depreciation deductions during the five year tax holiday which ended in 2005. The impact of the amount in dispute as at December 31, 2010 is approximately $26 million in current taxes and $23 million in future taxes, exclusive of any interest charges.

The Company has lodged an objection to the assessment. Based on the merits of the case and legal interpretation, management believes its position should be sustained and accordingly, no provision has been recorded in the financial statements.

13. United States generally accepted accounting principles:

The Company follows generally accepted accounting principles in Canada ('Canadian GAAP') which are different in some respects from those applicable in the United States and from practices prescribed by the United States Securities and Exchange Commission ('U.S. GAAP').

The significant differences between Canadian GAAP and U.S. GAAP with respect to the Company's consolidated statements of income (loss) for the three months and year ended December 31, 2010 and 2009 are as follows:



Three Months Ended Years Ended
--------------------- ---------------------
Dec 31 Dec 31 Dec 31 Dec 31
2010 2009 2010 2009
-------------------------------------------------- ---------------------
-------------------------------------------------- ---------------------
Net income in accordance
with Canadian GAAP $ 27,867 $ 25,718 $ 101,733 $ 738
Add (deduct)
adjustments for:
Depreciation and
amortization (a) (478) (478) (1,911) (1,911)
Stock-based
compensation (b) (307) (37) (4,202) (130)
Uncertainty in
income taxes (c) (857) (341) (1,929) (2,136)
Income tax effect
of above
adjustments (d) 167 167 669 669
-------------------------------------------------- ---------------------
Net income (loss) in
accordance with U.S.
GAAP $ 26,392 $ 25,029 $ 94,360 $ (2,770)
-------------------------------------------------- ---------------------

Per share information in
accordance with U.S. GAAP:
Basic net income (loss)
per share $ 0.29 $ 0.27 $ 1.02 $ (0.03)
Diluted net income
(loss) per share $ 0.28 $ 0.27 $ 1.01 $ (0.03)
-------------------------------------------------- ---------------------



The significant differences between Canadian GAAP and U.S. GAAP with respect to the Company's consolidated statements of comprehensive income (loss) for the three months and year ended December 31, 2010 and 2009 are as follows:



Three Months Ended
-----------------------------------------------------
December 31, 2010 Dec 31, 2009
-------------------------------------- ------------
Canadian GAAP Adjustments U.S. GAAP U.S. GAAP
------------------------------------------------------------ ------------
------------------------------------------------------------ ------------
Net income $ 27,867 $ (1,475) $ 26,392 $ 25,029

Change in fair value
of forward exchange
contracts, net of tax - - - 118
Change in fair value
of interest rate
swap, net of tax 2,372 - 2,372 229
Change related to
pension, net of tax (e) - (1,344) (1,344) 124
------------------------------------------------------------ ------------
Comprehensive income $ 30,239 $ (2,819) $ 27,420 $ 25,500
------------------------------------------------------------ ------------

Years Ended
-----------------------------------------------------
December 31, 2010 Dec 31, 2009
-------------------------------------- ------------
Canadian GAAP Adjustments U.S. GAAP U.S. GAAP
------------------------------------------------------------ ------------
------------------------------------------------------------ ------------
Net income (loss) $ 101,733 $ (7,373) $ 94,360 $ (2,770)

Change in fair value
of forward exchange
contracts, net of tax - - - 36
Change in fair value
of interest rate
swap, net of tax (15,593) - (15,593) (882)
Change related to
pension, net of tax (e) - (296) (296) 1,253
------------------------------------------------------------ ------------
Comprehensive income
(loss) $ 86,140 $ (7,669) $ 78,471 $ (2,363)
------------------------------------------------------------ ------------



a) Business combination:

Effective January 1, 1993, the Company combined its business with a methanol business located in New Zealand and Chile. Under Canadian GAAP, the business combination was accounted for using the pooling-of-interest method. Under U.S. GAAP, the business combination would have been accounted for as a purchase with the Company identified as the acquirer. In accordance with U.S. GAAP, an increase to depreciation expense by $0.5 million (2009 - $0.5 million) and $1.9 million (2009 - $1.9 million) was recorded for the three months and year ended December 31, 2010, respectively.

b) Stock-based compensation:

During 2010, the Company granted 394,065 stock appreciation rights ('SARs') and 735,505 tandem stock appreciation rights ("TSARs"). A SAR gives the holder a right to receive a cash payment equal to the amount the market price of the Company's common shares exceeds the exercise price of a unit. A TSAR gives the holder the choice between exercising a regular stock option or surrendering the option for a cash payment equal to the difference between the market price of a common share and the exercise price. Refer to Note 8 for further details regarding SARs and TSARs.

Under Canadian GAAP, both SARs and TSARs are accounted for using the intrinsic value method. The intrinsic value is measured by the amount the market price of the Company's common shares exceeds the exercise price of a unit. At December 31, 2010, compensation expense related to SARs and TSARs for Canadian GAAP was $3.4 million as the market price was higher than the exercise price. Under U.S. GAAP, SARs and TSARs are required to be accounted for using a fair value method. Changes in fair value are recognized in earnings for the proportion of the service that has been rendered at each reporting date. The Company used the Black-Scholes option pricing model to determine the fair value of the SARs and TSARs and this has resulted in an increase in cost of sales and operating expenses of $0.3 million and $4.2 million, for the three months and year ended December 31, 2010, respectively.

c) Accounting for uncertainty in income taxes:

U.S. GAAP for recording uncertainties in income taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In accordance with U.S. GAAP, an income tax expense of $0.9 million (2009 - $0.3 million) and $1.9 million (2009 - $2.1 million) was recorded for the three months and year ended December 31, 2010, respectively.

d) Income tax accounting:

The income tax differences include the income tax effect of the adjustments related to accounting differences between Canadian and U.S. GAAP. In accordance with U.S. GAAP, an increase to net income of $0.2 million (2009 - $0.2 million) and $0.7 million (2009 - $0.7 million) was recorded for the three months and year ended December 31, 2010.

e) Defined benefit pension plans:

Effective January 1, 2006, U.S. GAAP requires the Company to measure the funded status of a defined benefit pension plan at its balance sheet reporting date and recognize the unrecorded overfunded or underfunded status as an asset or liability with the change in that unrecorded funded status recorded to other comprehensive income. Under U.S. GAAP, all deferred pension amounts from Canadian GAAP are reclassified to accumulated other comprehensive income. In accordance with U.S. GAAP, a decrease to other comprehensive income of $1.3 million (2009 - increase of $0.1 million) and $0.3 million (2009 - increase of $1.3 million) was recorded for the three months and year ended December 31, 2010.

f) Interest in Atlas joint venture:

U.S. GAAP requires interests in joint ventures to be accounted for using the equity method. Canadian GAAP requires proportionate consolidation of interests in joint ventures. The Company has not made an adjustment in this reconciliation for this difference in accounting principles because the impact of applying the equity method of accounting does not result in any change to net income or shareholders' equity. This departure from U.S. GAAP is acceptable for foreign private issuers under the practices prescribed by the United States Securities and Exchange Commission.

g) Non-controlling interests:

U.S. GAAP requires the ownership interests in subsidiaries held by parties other than the parent be clearly identified, labelled, and presented in the consolidated statement of financial position within equity, but separate from the parent's equity. Under this standard, the Company would be required to reclassify non-controlling interest on the consolidated balance sheet into shareholders' equity. The Company has not made an adjustment in this reconciliation for this difference in accounting principles because it results in a balance sheet reclassification and does not impact net income or comprehensive income as disclosed in the reconciliation.



Methanex Corporation
Quarterly History (unaudited)

YTD
2010 Q4 Q3 Q2 Q1
--------------------------------------------------------------------------

METHANOL SALES VOLUMES
(thousands of tonnes)

Company produced 3,540 831 885 900 924
Purchased methanol 2,880 806 792 678 604
Commission sales (1) 509 151 101 107 150
--------------------------------------------------------------------------

6,929 1,788 1,778 1,685 1,678
--------------------------------------------------------------------------

METHANOL PRODUCTION
(thousands of tonnes)

Chile 935 208 194 229 304
Titan, Trinidad 891 233 217 224 217
Atlas, Trinidad (63.1%) 884 266 284 96 238
New Zealand 830 206 200 216 208
--------------------------------------------------------------------------

3,540 913 895 765 967
--------------------------------------------------------------------------

AVERAGE REALIZED METHANOL PRICE (2)
($/tonne) 306 348 286 284 305
($/gallon) 0.92 1.05 0.86 0.85 0.92

PER SHARE INFORMATION ($ per share)
Basic net income (loss) $ 1.10 0.30 0.36 0.13 0.32
Diluted net income (loss) $ 1.09 0.30 0.35 0.13 0.31
--------------------------------------------------------------------------

2009 Q4 Q3 Q2 Q1
--------------------------------------------------------------------------

METHANOL SALES VOLUMES
(thousands of tonnes)

Company produced 3,764 880 943 941 1,000
Purchased methanol 1,546 467 480 329 270
Commission sales (1) 638 152 194 161 131
--------------------------------------------------------------------------

5,948 1,499 1,617 1,431 1,401
--------------------------------------------------------------------------

METHANOL PRODUCTION
(thousands of tonnes)

Chile 942 265 197 252 228
Titan, Trinidad 764 188 188 165 223
Atlas, Trinidad (63.1%) 1,015 279 257 275 204
New Zealand 822 223 202 203 194
--------------------------------------------------------------------------

3,543 955 844 895 849
--------------------------------------------------------------------------

AVERAGE REALIZED METHANOL PRICE (2)
($/tonne) 225 282 222 192 199
($/gallon) 0.68 0.85 0.67 0.58 0.60

PER SHARE INFORMATION ($ per share)
Basic net income (loss) 0.01 0.28 (0.01) (0.06) (0.20)
Diluted net income (loss) 0.01 0.28 (0.01) (0.06) (0.20)
--------------------------------------------------------------------------
(1) Commission sales represent volumes marketed on a commission basis.
Commission income is included in revenue when earned.

(2) Average realized price is calculated as revenue, net of commissions
earned, divided by the total sales volumes of produced and purchased
methanol.



Jason Chesko
Methanex Corporation
604 661 2600 or Toll Free: 1 800 661 8851

Website: www.methanex.com

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