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Methanex Corporation (MX)
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Methanex Reports First Quarter Results and Increases Dividend 10%; Egypt and Medicine Hat Plants in Production

Apr. 27, 2011 (Marketwire Canada) --

VANCOUVER, BRITISH COLUMBIA--(Marketwire - April 27, 2011) - Methanex Corporation (TSX:MX)(NASDAQ:MEOH)(SANTIAGO:Methanex) -

For the first quarter of 2011, Methanex reported Adjusted EBITDA(1) of $77.1 million and net income attributable to Methanex shareholders of $34.6 million ($0.37 per share on a diluted basis). This compares with Adjusted EBITDA(1)of $73.0 million and net income attributable to Methanex shareholders of $27.0 million ($0.29 per share on a diluted basis) for the fourth quarter of 2010.

Methanex also announced that its Board of Directors has approved a 10 percent increase to its quarterly dividend to shareholders, from US$0.155 to US$0.17 per share. The increased dividend will apply commencing with the dividend payable on June 30, 2011 to holders of common shares of record on June 16, 2011.

Bruce Aitken, President and CEO of Methanex commented, "Methanol pricing continued to be firm in the first quarter and we reported similar earnings to last quarter. Entering the second quarter, methanol demand continues to be strong and industry conditions remain relatively balanced."

Mr. Aitken added, "I am delighted to report that the Egypt plant began shipments earlier this month and the Medicine Hat plant produced first methanol last week. With the increased production and cash flow generation these plants provide and the positive outlook for the methanol industry, we are pleased to announce an increase to our regular dividend. This increase represents the seventh time we have increased our dividend since it was implemented in 2002."

Mr. Aitken concluded, "We have a strong balance sheet with US$240 million of cash on hand and an undrawn credit facility, and we believe we are well positioned to continue to invest to grow the Company."

A conference call is scheduled for April 28, 2011 at 12:00 noon ET (9:00 am PT) to review these first quarter results. To access the call, dial the Conferencing operator ten minutes prior to the start of the call at (416) 695-7848, or toll free at (800) 952-4972. A playback version of the conference call will be available for three weeks at (416) 695-5800, or toll free at (800) 408-3053. The passcode for the playback version is 3412372. 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 First Quarter 2011 press release contains forward-looking statements with respect to us and the chemical industry. Refer to Forward-Looking Information Warning in the attached First Quarter 2011 Management's Discussion and Analysis for more information.

(1) Adjusted EBITDA is a non-IFRS measure that does not have any standardized meaning prescribed by International Financial Reporting Standards (IFRS) and therefore is unlikely to be comparable to similar measures presented by other companies. Refer to Additional Information - Supplemental Non-IFRS Measures in the attached First Quarter 2011 Management's Discussion and Analysis for a description of each supplemental non-IFRS measure and a reconciliation to the most comparable IFRS measure.

1 Interim Report

For the Three Months Ended

March 31, 2011

At April 27, 2011 the Company had 92,840,385 common shares issued and outstanding and stock options exercisable for 3,862,436 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.
Investor Information
All financial reports, news releases and corporate information can be
accessed on our website at www.methanex.com.
Transfer Agents & Registrars
CIBC Mellon Trust Company
320 Bay Street
Toronto, Ontario, Canada M5H 4A6
Toll free in North America: 1-800-387-0825
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

FIRST QUARTER MANAGEMENT'S DISCUSSION AND ANALYSIS

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

This First Quarter 2011 Management's Discussion and Analysis ("MD&A") dated April 27, 2011 for Methanex Corporation ("the Company") should be read in conjunction with the Company's condensed consolidated interim financial statements for the period ended March 31, 2011, which are prepared in accordance with International Accounting Standards (IAS) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB), as well as the 2010 Annual Consolidated Financial Statements and the MD&A included in the Methanex 2010 Annual Report, which were prepared in accordance with Canadian generally accepted accounting principles (Canadian GAAP). The Methanex 2010 Annual Report and additional information relating to Methanex is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Refer to the International Financial Reporting Standards (IFRS) section of this MD&A for a discussion of the Company's adoption of IFRS.

                                                   Three Months Ended
                                            ------------------------------
                                                Mar 31    Dec 31    Mar 31
($ millions, except where noted)                  2011    2010(5)   2010(5)
--------------------------------------------------------------------------
Production (thousands of tonnes)                   801       913       967
Sales volumes (thousands of tonnes):                                   
 Produced methanol                                 848       831       924
 Purchased methanol                                835       806       604
 Commission sales(1)                               172       151       150
--------------------------------------------------------------------------
 Total sales volumes                             1,855     1,788     1,678
Methanex average non-discounted posted
 price ($ per tonne)(2)                            436       407       352
Average realized price ($ per tonne)(3)            367       348       305
Adjusted EBITDA(4)                                77.1      73.0      80.9
Cash flows from operating activities             124.5      12.8      69.0
Cash flows from operating activities before
 changes in non-cash working capital(4)           80.0      94.2      91.2
Operating income                                  47.4      41.3      45.8
Net income attributable to Methanex
 shareholders                                     34.6      27.0      27.0
Basic net income per common share
 attributable to Methanex shareholders            0.37      0.29      0.29
Diluted net income per common share
 attributable to Methanex shareholders            0.37      0.29      0.29
Common share information (millions of shares):      
 Weighted average number of common shares         92.7      92.3      92.1
 Diluted weighted average number of
  common shares                                   94.3      94.0      93.4
 Number of common shares outstanding,
  end of period                                   92.7      92.6      92.2
--------------------------------------------------------------------------
(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 http://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-IFRS measures that do not have any standardized
    meaning prescribed by International Financial Reporting Standards (IFRS)
    and therefore are unlikely to be comparable to similar measures
    presented by other companies. Refer to Additional Information -
    Supplemental Non-IFRS Measures for a description of each non-IFRS
    measure and a reconciliation to the most comparable IFRS measure. 
(5) These amounts have been restated in accordance with IFRS and have not
    been previously disclosed.
--------------------------------------------------------------------------
PRODUCTION SUMMARY                                                     
                                          Q1 2011      Q4 2010      Q1 2010
(thousands of tonnes)    Capacity(1)   Production   Production   Production
---------------------------------------------------------------------------
Chile I, II, III and IV         950           183          208          304
Atlas (Trinidad)
 (63.1% interest)               288           263          266          238
Titan (Trinidad)                225           121          233          217
New Zealand(2)                  213           203          206          208
Egypt (60% interest)(3)         190            31            -            -
Medicine Hat(3)                 118             -            -            -
---------------------------------------------------------------------------
                              1,984           801          913          967
---------------------------------------------------------------------------
(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 0.85 million
    tonne per year Motunui facility that we restarted in late 2008.
    Practical operating capacity will depend partially on the composition
    of natural gas feedstock and may differ from 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). 
(3) The new Egypt methanol facility commenced production in mid-March 2011.
    We are currently commissioning our Medicine Hat, Alberta facility
    (refer to the Egypt and Medicine Hat sections for more
    information).

Chile

During the first quarter of 2011, we produced 183,000 tonnes in Chile operating one plant at approximately 60% capacity. 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 2010 Annual Report for more information.

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 March 31, 2011, we had contributed approximately $91 million. Over the past few years, we have also provided GeoPark with $57 million (of which approximately $37 million had been repaid at March 31, 2011) 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 first quarter of 2011 approximately 55% 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. We are participating in a consortium for two exploration blocks under this bidding round - the Tranquilo and Otway blocks. The consortium includes Methanex, Wintershall, GeoPark, Pluspetrol and International Finance Corporation, member of the World Bank Group. We have approximately 15% participation in the consortium. At March 31, 2011, we had contributed approximately $3 million for our share of the exploration costs associated with these blocks.

Lower production at our Chile facilities during the first quarter of 2011 compared with the fourth quarter of 2010 was due to lower natural gas deliveries to our plants in southern Chile. While significant investments have been made in the last few years for natural gas exploration and development in southern Chile, the timelines for a significant increase in gas deliveries to our plants are much longer than we originally anticipated and the short-term outlook for gas supply in Chile continues to be challenging. As we enter the southern hemisphere winter months when residential energy demand is at its peak, there is increased pressure on short-term natural gas supply/demand fundamentals in southern Chile and increased risk that gas supply to our plant could fall below the level necessary to maintain the operation of one plant.

The future 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 future exploration and development activities in southern Chile. We cannot provide assurance regarding the production rates from existing natural gas fields or that we, 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. As a result, we cannot provide assurance over changes in the level of natural gas supply or that we will be able to source sufficient natural gas to operate any capacity in Chile and that this will not have an adverse impact on our results of operations and financial condition.

Trinidad

Our equity ownership of methanol facilities in Trinidad represents over 2.0 million tonnes of competitive-cost annual capacity. During the first quarter of 2011, these facilities produced 384,000 tonnes compared with 499,000 tonnes during the fourth quarter of 2010. Production at these facilities was lower by 115,000 tonnes during the first quarter of 2011 compared with the fourth quarter of 2010 primarily as a result of unplanned maintenance activities completed at the Titan facility which lasted approximately 35 days during the first quarter of 2011.

New Zealand

Our New Zealand facilities provide competitive-cost capacity and are underpinned by shorter term natural gas supply contracts. During the first quarter of 2011, we produced 203,000 tonnes compared with 206,000 tonnes during the fourth quarter of 2010. We are currently operating one 850,000 tonne per year plant at our Motunui facility in New Zealand and we have natural gas contracts with a number of gas suppliers that will allow us to continue to operate this plant through 2012. We also have an additional 1.38 million tonnes per year of idled capacity in New Zealand, including a second 850,000 tonne per year Motunui plant and a 530,000 tonne per year plant at our nearby site in Waitara Valley. These facilities provide the potential to increase production in New Zealand depending on the methanol supply and demand dynamics and the availability of economically priced natural gas feedstock. We believe there has been continued improvement in the natural gas supply outlook in New Zealand and we are focused on accessing additional natural gas supply to increase production in New Zealand. We are continuing to pursue opportunities to obtain economically priced natural gas with suppliers in New Zealand to underpin a restart of a second plant.

Egypt

The new 1.26 million tonne per year methanol plant in Egypt produced first methanol in January 2011. The start-up coincided with widespread anti-government protests and civil unrest in Egypt. For the safety and security of our employees, we took the decision to temporarily close our Cairo office and curtail the commissioning activities at the plant in Damietta, Egypt. As conditions stabilized, we reopened our Cairo office and our plant in Damietta resumed operations to continue the start-up and commissioning process.

Since mid-March 2011, the Egypt methanol plant has operated well, producing 51,000 tonnes (60% interest - 31,000 tonnes) of methanol during the first quarter of 2011 with shipments commencing in early April. We have a 60% interest in the facility and have marketing rights for 100% of the production. This facility is underpinned by a 25-year take-or-pay natural gas purchase agreement where the gas price varies with methanol prices. We believe this methanol facility will further enhance our cost structure and our market position and it is well located to supply the European market.

Medicine Hat

We are currently commissioning our 470,000 tonne per year facility in Medicine Hat, Alberta and the plant produced first methanol in late April 2011. We have a program in place to purchase natural gas on the Alberta gas market and to date we have contracted sufficient volumes of natural gas to meet approximately 80% of our requirements when operating at capacity for the period from start-up to October 2012.

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 first quarter of 2011, we recorded Adjusted EBITDA of $77.1 million and net income attributable to Methanex shareholders of $34.6 million ($0.37 per share on a diluted basis). This compares with Adjusted EBITDA of $73.0 million and net income attributable to Methanex shareholders of $27.0 million ($0.29 per share on a diluted basis) and Adjusted EBITDA of $80.9 million and net income attributable to Methanex shareholders of $27.0 million ($0.29 per share on a diluted basis) for the fourth and first quarter of 2010, respectively.

Adjusted EBITDA
The changes in Adjusted EBITDA resulted from changes in the following:
                                                     Q1 2011       Q1 2011
                                                    compared      compared
                                                        with          with
($ millions)                                         Q4 2010       Q1 2010
--------------------------------------------------------------------------
Average realized price                          $         32  $        105
Sales volume                                              4            13
Total cash costs                                         (32)         (122)
--------------------------------------------------------------------------
                                                $          4  $         (4)
--------------------------------------------------------------------------
Average realized price
                                                    Three Months Ended
                                              ----------------------------
                                            Mar 31     Dec 31       Mar 31
($ per tonne, except where noted)             2011       2010         2010
--------------------------------------------------------------------------
Methanex average non-discounted
 posted price(1)                               436        407          352
Methanex average realized price                367        348          305
Average discount                               16%         14%          13%
--------------------------------------------------------------------------
(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 http://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). Into the first quarter of 2011, demand continued to be strong and the industry operated at moderately higher utilization rates. As a result, market conditions have been balanced and the pricing environment has been relatively stable (refer to Supply/Demand Fundamentals section for more information). Our average non-discounted posted price for the first quarter of 2011 was $436 per tonne compared with $407 per tonne for the fourth quarter of 2010. Our average realized price for the first quarter of 2011 was $367 per tonne compared with $348 per tonne for the fourth quarter of 2010 and this increased revenue by $32 million.

Sales volume

Total methanol sales volumes excluding commission sales volumes for the first quarter of 2011 were higher compared with the fourth quarter of 2010 and the first quarter of 2010 by 46,000 tonnes and 155,000 tonnes, respectively. The higher sales volumes for the first quarter of 2011 compared with the fourth quarter of 2010 and the first quarter of 2010 resulted in higher Adjusted EBITDA by $4 million and $13 million, respectively.

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. Most of 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:

                                                  Q1 2011       Q1 2011
                                                 compared      compared
                                                     with          with
($ millions)                                      Q4 2010       Q1 2010
-----------------------------------------------------------------------
Produced methanol costs, primarily natural                             
gas                                         $         (18) $        (37)
Proportion of purchased methanol sales                 (1)          (50)
Purchased methanol costs                              (21)          (27)
Share-based compensation                                8             3
Unabsorbed fixed costs                                 (3)           (5)
Other, net                                              3            (6)
-----------------------------------------------------------------------
Decrease in Adjusted EBITDA                 $         (32) $       (122)
-----------------------------------------------------------------------

Produced methanol costs, primarily natural gas

Natural gas costs on sales of produced methanol for the first quarter of 2011 were higher than comparable periods in 2010, 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 first quarter of 2011 was higher for the comparable periods noted above.

Purchased methanol costs

Purchased methanol costs were higher for the first quarter of 2011 compared with the periods noted above, primarily as a result of higher methanol pricing and timing of inventory flows.

Share-based compensation

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

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 with no subsequent re-measurement in fair value. Accordingly, stock-based compensation expense associated with stock options will not vary significantly from period to period. Commencing in 2010, we granted share appreciation rights (SARs) and tandem share appreciation rights (TSARs) to replace grants of stock options as a result of our initiative to reduce dilution to shareholders. SARs and TSARs are units that 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. SARs and TSARs are measured based on estimated fair value, which is determined using the Black-Scholes option pricing model.

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. For deferred, restricted and performance share units, the fair value is initially measured at the grant date and subsequently re-measured based on the market value of the Company's common shares.

For all the share-based awards with the exception of stock options, the initial value and any subsequent change in fair value is recognized in earnings over the related service period for the proportion of the service that has been rendered at each reporting date. Accordingly, share-based compensation associated with these share-based awards may vary significantly from period to period as a result of changes in the share price.

Share-based compensation expense for the first quarter of 2011 was $10 million compared with $18 million for the fourth quarter of 2010 and $13 million for the first quarter of 2010. Share-based compensation expense was lower by $8 million and $3 million, respectively, primarily due to a smaller increase in the share price in the first quarter of 2011 compared with these periods.

Unabsorbed fixed costs

Unabsorbed fixed costs for the first quarter of 2011 were higher by $3 million compared with the fourth quarter of 2010 and higher by $5 million compared with the first quarter of 2010 primarily as a result of lower production at our Titan facility in Trinidad during the first quarter of 2011 compared with these periods.

Other, net

For the first quarter of 2011 compared with the fourth quarter of 2010, ocean freight and other logistics costs were lower by approximately $3 million primarily as a result of higher backhaul cost recoveries.

For the first quarter of 2011 compared with the first quarter of 2010, other costs were higher by approximately $6 million primarily as a result of higher in-market distribution costs which are substantially recovered in revenues and timing of selling, general and administrative costs.

Depreciation and Amortization

Depreciation and amortization was $30 million for the first quarter of 2011 compared with $32 million for the fourth quarter of 2010 and $35 million for the first quarter of 2010.

Finance Costs

                                                    Three Months Ended
                                            ------------------------------
                                                Mar 31    Dec 31    Mar 31
($ millions)                                      2011      2010      2010
--------------------------------------------------------------------------
Finance costs before capitalized interest    $      16  $     17  $     17
Less capitalized interest                           (7)      (10)       (9)
--------------------------------------------------------------------------
Finance costs                                $       9  $      7  $      8
--------------------------------------------------------------------------

Capitalized interest relates to interest costs capitalized during the commissioning of the 1.26 million tonne per year methanol facility in Egypt. The Egypt methanol facility commenced production in mid-March 2011 and accordingly, we recorded interest costs related to the Egypt project to earnings from this date.

Finance Income and Other Expenses

                                                    Three Months Ended
                                            ------------------------------
                                                Mar 31    Dec 31    Mar 31
($ millions)                                      2011      2010      2010
--------------------------------------------------------------------------
Finance income and other expenses            $       5  $      4  $      1
--------------------------------------------------------------------------

Finance income and other expenses for the first quarter of 2011 was $5 million compared with $4 million for the fourth quarter of 2010 and $1 million for the first quarter of 2010. The increase in finance income during the first quarter of 2011 compared with the fourth quarter of 2010 and the first quarter of 2010 was primarily due to the impact of changes in foreign exchange rates.

Income Taxes

We recorded income tax expense of $9.5 million for the first quarter of 2011 compared with $11.2 million for the fourth quarter of 2010 and $12.8 million for the first quarter of 2010. The effective tax rate for the first quarter of 2011 was approximately 22% compared with approximately 29% for the fourth quarter of 2010 and approximately 33% for the first quarter of 2010. The lower tax rate in the first quarter of 2011 compared with the fourth quarter of 2010 and the first quarter of 2010 was primarily due to a higher proportion of our income being earned in lower tax jurisdictions in the first quarter of 2011.

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 13% 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)
                                               Apr     Mar     Feb     Jan
(US$ per tonne)                               2011    2011    2011    2011
--------------------------------------------------------------------------
--------------------------------------------------------------------------
United States                                  426     426     426     449
Europe(2)                                      438     456     444     438
Asia                                           395     420     420     460
--------------------------------------------------------------------------
(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.
--------------------------------------------------------------------------

During the first quarter of 2011, demand continued to be strong and the industry operated at slightly higher utilization rates. As a result, market conditions have been balanced and the pricing environment has been relatively stable. Our average non- discounted price for April 2011 is approximately $420 per tonne compared to an average price of $436 for the first quarter of 2011. We recently announced our North America non-discounted price for May at $426 per tonne which is unchanged from April.

Our 1.26 million tonne per year plant in Egypt commenced shipments in early April and our 470,000 tonne plant in Medicine Hat produced first methanol in late April. Beyond this, there is little new capacity expected to come on-stream outside China over the next few years. There is a 0.85 million tonne plant expected to restart in Beamount, Texas in 2012 and a 0.7 million tonne plant expected to start up in Azerbaijan in 2013.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities before changes in working capital in the first quarter of 2011 were $80 million compared with $94 million for the fourth quarter of 2010 and $91 million for the first quarter of 2010.

During the first quarter of 2011, we paid a quarterly dividend of US$0.155 per share, or $14 million. Additionally, the Board of Directors has approved a 10 percent increase to our quarterly dividend to shareholders, from US$0.155 to US$0.17 per share. The increased dividend will apply commencing with the dividend payable on June 30, 2011 to holders of common shares of record on June 16, 2011.

During the first quarter of 2011, approximately $21 million in costs were capitalized to the Egypt plant under construction. During the first quarter of 2011, a debt principal payment of $16 million was paid on the Egypt limited recourse debt facilities. At March 31, 2011, management believes the Company was in compliance with all of the covenants and default provisions related to long-term debt obligations.

We have agreements in place to participate in or support natural gas exploration and development in southern Chile. During the first quarter of 2011, we paid $6 million to fund natural gas exploration and development in the Dorado Riquelme block. During the first quarter of 2011, GeoPark repaid $5 million through natural gas deliveries to our plants in southern Chile (refer to the Production Summary section for more information).

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 March 31, 2011 was $240 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 $75 million for the period to the end of 2012. We are currently commissioning our 470,000 tonne per year methanol plant in Medicine Hat. The estimated capital cost for this restart is approximately $45 million, of which approximately $32 million was incurred to March 31, 2011 with the remainder to be incurred in the second quarter of 2011.

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

SHORT-TERM OUTLOOK

Into the second quarter of 2011, demand continues to be strong and we expect market conditions to remain relatively balanced.

We anticipate a significant increase in our production into the second quarter of 2011. The new 1.26 million tonne per year methanol facility in Egypt has been operating well since mid-March and shipments began in early April. We are currently commissioning our 470,000 tonne per year plant in Medicine Hat, Alberta with production of first methanol in late April. 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 competitive-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 March 31, 2011, 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.

INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

Transition from Canadian Generally Accepted Accounting Principles (Canadian GAAP) to IFRS

The quarter ending March 31, 2011 with comparative financial results for 2010, is our first interim period reported under IFRS. All comparative figures have been restated to be in accordance with IFRS, unless specifically noted otherwise.

Our financial statements were prepared in accordance with Canadian GAAP until December 31, 2010. While IFRS uses a conceptual framework similar to Canadian GAAP, there are significant differences in recognition, measurement and disclosures. In our MD&A in the 2010 Annual Report, we disclosed the significant impacts on transition to IFRS. The disclosure in our MD&A in the 2010 Annual Report is consistent with the impacts disclosed in the condensed consolidated interim financial statements. For a description of the significant accounting policies the Company has adopted under IFRS, including the estimates and judgments we consider most significant in applying those accounting policies, please refer to note 2 of the condensed consolidated interim financial statements.

The adoption of IFRS resulted in some changes to the consolidated balance sheets and income statements of the Company previously reported under Canadian GAAP. To help users of the financial statements better understand the impact of the adoption of IFRS on the Company, we have provided reconciliations from Canadian GAAP to IFRS for total assets, liabilities, and equity, as well as net income and comprehensive income for the comparative reporting periods. Please refer to note 18 of the condensed consolidated interim financial statements for the reconciliations between IFRS and Canadian GAAP.

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. In our MD&A in the 2010 Annual Report, we disclosed the optional exemptions available under IFRS 1 that we expected to elect on transition to IFRS. The elections as previously disclosed are consistent with the elections as disclosed in the condensed consolidated interim financial statements. Please refer to note 18 of the condensed consolidated interim financial statements for a detailed description of the IFRS 1 exemptions we elected to apply.

IFRS Conversion

Our plan to convert our consolidated financial statements to IFRS at the change over date of January 1, 2011, with comparative financial results included a formal project governance structure that included the Audit, Finance and Risk Committee, senior management, and an IFRS steering committee to monitor progress and review and approve recommendations. The IFRS transition plan progressed according to schedule and was comprehensive and addressed topics such as the impact of IFRS on accounting policies and implementation decisions, infrastructure, business activities, compensation matters and control activities.

Anticipated changes to IFRS

Consolidation and Joint Venture Accounting

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 ultimately have on the conclusions related to the accounting treatment of our interest in joint ventures is currently unknown. The IASB currently expects to issue a final standard in 2011.

Leases

As part of their global conversion project, the International Accounting Standards Board (IASB) and the U.S. Financial Accounting Standards Board ("FASB") issued in August 2010 a joint Exposure Draft proposing that lessees would be required to recognize all leases on the statement of financial position. 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 the Consolidated Statements of Financial Position, resulting in a material increase to total assets and liabilities. The IASB and FASB currently expect to issue a final standard in 2011.

ADDITIONAL INFORMATION - SUPPLEMENTAL NON-IFRS MEASURES

In addition to providing measures prepared in accordance with International Financial Reporting Standards (IFRS), we present certain supplemental non-IFRS 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 attributable to Methanex Corporation shareholders. These measures do not have any standardized meaning prescribed by IFRS 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 IFRS.

Adjusted EBITDA

This supplemental non-IFRS 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 IFRS 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, share-based compensation expense, other non-cash items, taxes paid, and interest and other income (expense).

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

                                                    Three Months Ended
                                        -----------------------------------
                                             Mar 31      Dec 31      Mar 31
($ thousands)                                  2011        2010        2010
---------------------------------------------------------------------------
Cash flows from operating activities     $  124,520  $   12,755  $   69,021
Add (deduct):                               
 Changes in non-cash working capital        (44,486)     81,438      22,177
 Other cash payments, including share-                             
  based compensation                          5,334         163       3,162
 Share-based compensation expense           (10,080)    (18,158)    (13,396)
 Other non-cash items                           (31)        732        (542)
 Taxes paid                                   6,669         159       1,770
 Finance income and other expenses           (4,859)     (4,088)     (1,260)
---------------------------------------------------------------------------
Adjusted EBITDA                          $   77,067  $   73,001  $   80,932
---------------------------------------------------------------------------

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

Cash flows from operating activities before changes in non-cash working capital are reconciled to IFRS measures in our consolidated statements of cash flows.

QUARTERLY FINANCIAL DATA (UNAUDITED)
A summary of selected financial information for the prior eight quarters
is as follows:
                                               Three Months Ended
                                -------------------------------------------
($ thousands, except per share      Mar 31     Dec 31     Sep 30     Jun 30
 amounts)                             2011     2010(1)    2010(1)    2010(1)
---------------------------------------------------------------------------
Revenue                          $ 619,007  $ 570,337  $ 480,997  $ 448,543
Net income(2)                       34,610     27,009     28,662     14,804
Net income before unusual item(2)   34,610     27,009      6,439     14,804
Basic net income per
 common share(2)                      0.37       0.29       0.31       0.16
Basic net income per common                                                 
 share before unusual item(2)         0.37       0.29       0.07       0.16
Diluted net income per
 common share(2)                      0.37       0.29       0.31       0.16
Diluted net income per common                                            
 share before unusual item(2)         0.37       0.29       0.07       0.16
---------------------------------------------------------------------------
                                               Three Months Ended           
                                -------------------------------------------
($ thousands, except per share      Mar 31     Dec 31     Sep 30     Jun 30
 amounts)                           2010(1)    2009(3)    2009(3)    2009(3)
---------------------------------------------------------------------------
Revenue                          $ 466,706  $ 381,729  $ 316,932  $ 245,501
Net income (loss)(2)                27,045     25,718       (831)    (5,743)
Net income (loss) before
 unusual item(2)                    27,045     25,718       (831)    (5,743)
Basic net income (loss) per                                                 
 common share(2)                      0.29       0.28      (0.01)     (0.06)
Basic net income (loss) per                                                 
 common share before
 unusual item(2)                      0.29       0.28      (0.01)     (0.06)
Diluted net income (loss) per                                               
 common share(2)                      0.29       0.28      (0.01)     (0.06)
Diluted net income (loss) per                                               
 common share before
 unusual item(2)                      0.29       0.28      (0.01)     (0.06)
---------------------------------------------------------------------------
(1) These amounts have been restated in accordance with IFRS and have not
    been previously disclosed.
(2) Attributable to Methanex Corporation shareholders.
(3) These figures are reported in accordance with Canadian GAAP, and have
    not been restated in accordance with IFRS, as the Company's date of
    transition from Canadian GAAP to IFRS was January 1, 2010.

FORWARD-LOOKING INFORMATION WARNING

This First Quarter 2011 Management's Discussion and Analysis ("MD&A") as well as comments made during the First Quarter 2011 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, 
--  expected levels and timing of natural gas supply to our plants,
    including without limitation, levels of natural gas supply from
    investments in natural gas exploration and development in Chile and New
    Zealand and availability of economically priced natural gas in Chile,
    New Zealand and Canada, 
--  capital committed by third parties towards future natural gas
    exploration in Chile and New Zealand, 
--  expected capital expenditures, including without limitation, those to
    support natural gas exploration and development in Chile and New Zealand
    and the restart of our idled methanol facilities, 
--  anticipated production rates of our plants, including without
    limitation, our Chilean facilities, the new methanol plant in Egypt and
    the restart of our Medicine Hat facility which is currently in the
    commissioning phase, 
--  expected operating costs, including natural gas feedstock costs and
    logistics costs, 
--  expected tax rates or resolutions to tax disputes, 
--  expected cash flows and earnings capability, 
--  anticipated completion date of, and cost to complete, our Medicine Hat
    restart project, 
--  ability to meet covenants associated with our long-term debt
    obligations, including without limitation, the Egypt limited recourse
    debt facilities which have conditions associated with operational
    completion of the plant and related mortgages which require actions by
    Egyptian governmental entities, 
--  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), 
--  expected actions of governments, gas suppliers, courts, tribunals or
    other third parties, and 
--  expected impact on our results of operations in Egypt and our financial
    condition as a consequence of actions taken by the Government of Egypt
    and its agencies. 

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, 
--  success of natural gas exploration in Chile and New Zealand and our
    ability to procure economically priced natural gas in Chile, New Zealand
    and Canada, 
--  production rates of our facilities, including without limitation, our
    Chilean facilities, the new methanol plant in Egypt and the restart of
    our Medicine Hat facility which is currently in the commissioning phase,
--  receipt or issuance of third party consents or approvals, including
    without limitation, governmental registrations of land title and related
    mortgages in Egypt, 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 Medicine Hat restart project, 
--  ability to meet covenants associated with our long-term debt
    obligations, including without limitation, the Egypt limited recourse
    debt facilities which have conditions associated with operational
    completion of the plant and completion of certain land title
    registrations and related mortgages which require actions by Egyptian
    governmental entities, 
--  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,
--  absence of a material negative impact from changes in laws or
    regulations, and
--  enforcement of contractual arrangements and ability to perform
    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 Chile, New Zealand, and Canada on commercially acceptable terms, 
--  the timing of start-up and cost to complete our Medicine Hat restart
    project, 
--  the ability to successfully carry out corporate initiatives and
    strategies, 
--  actions of competitors and suppliers, 
--  actions of governments and governmental authorities, including without
    limitation, 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 or existing contractual
    arrangements, 
--  world-wide economic conditions, and 
--  other risks described in our 2010 Management's Discussion and Analysis
    and this First Quarter 2011 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, depreciation and amortization (Adjusted EBITDA) (refer to the Supplemental Non-IFRS Measures section for a reconciliation to the most comparable IFRS measure), depreciation and amortization, finance costs, finance income and other expense, 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.                                                          
CASH 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 margin per    
          tonne of 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
                                             -----------------------------
                                                     Mar 31         Mar 31
                                                       2011           2010
--------------------------------------------------------------------------
Revenue                                      $      619,007 $      466,706
Cost of sales and operating expenses
 (note 11)                                          541,940        385,774
Depreciation and amortization (note 11)              29,700         35,085
--------------------------------------------------------------------------
Operating income                                     47,367         45,847
Finance costs (note 12)                              (9,193)        (8,052)
Finance income and other expenses                     4,859          1,260
--------------------------------------------------------------------------
Profit before income tax expense                     43,033         39,055
Income tax expense:                                                       
  Current                                            (8,275)        (6,794)
  Deferred                                           (1,224)        (6,041)
--------------------------------------------------------------------------
                                                     (9,499)       (12,835)
--------------------------------------------------------------------------
Net income                                   $       33,534 $       26,220
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Attributable to:                                                          
 Methanex Corporation shareholders                   34,610         27,045
 Non-controlling interests                           (1,076)          (825)
--------------------------------------------------------------------------
                                             $       33,534 $       26,220
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Income for the period attributable to                                     
 Methanex Corporation shareholders                                        
  Basic net income per common share          $         0.37 $         0.29
  Diluted net income per common share        $         0.37 $         0.29
Weighted average number of common
 shares outstanding                              92,683,755     92,128,325
Diluted weighted average number of
 common shares outstanding                       94,311,878     93,412,230
See accompanying notes to condensed consolidated interim financial
statements.
Methanex Corporation                                                       
Consolidated Statements of Comprehensive Income (unaudited)                
(thousands of U.S. dollars)                                      
                                                      Three Months Ended
                                                 --------------------------
                                                        Mar 31       Mar 31
                                                          2011         2010
---------------------------------------------------------------------------
Net income                                         $    33,534  $    26,220
 Other comprehensive income:                                               
  Change in fair value of forward exchange                                 
   contracts, net of tax                                     -          253
  Change in fair value of interest rate swap                               
   contracts, net of tax                                   195       (7,173)
  Interest rate swap cash settlement reclassified                          
   to interest expense                                     870            -
  Interest rate swap cash settlement reclassified                          
   to property, plant and equipment                      7,279        7,505
---------------------------------------------------------------------------
                                                         8,344          585
---------------------------------------------------------------------------
Comprehensive income                               $    41,878  $    26,805
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Attributable to:                                                           
  Methanex Corporation shareholders                     39,616       27,497
  Non-controlling interests                              2,262         (692)
---------------------------------------------------------------------------
                                                   $    41,878  $    26,805
---------------------------------------------------------------------------
---------------------------------------------------------------------------
See accompanying notes to condensed consolidated interim financial
statements. 
Methanex Corporation                                                      
Consolidated Statements of Financial Position (unaudited)    
(thousands of U.S. dollars)                                               
                                        Mar 31        Dec 31         Jan 1
                                          2011          2010          2010
--------------------------------------------------------------------------
ASSETS                                                                    
Current assets:                                                           
 Cash and cash equivalents       $     239,805 $     193,794 $     169,788
 Trade and other receivables                                              
  (note 3)                             345,026       320,027       257,418
 Inventories (note 4)                  210,234       229,657       170,904
 Prepaid expenses                       27,867        26,877        23,893
--------------------------------------------------------------------------
                                       822,932       770,355       622,003
Non-current assets:                                                       
 Property, plant and equipment                                            
  (note 5)                           2,272,843     2,258,576     2,226,673
 Other assets (note 7)                 108,589       113,263       134,905
--------------------------------------------------------------------------
                                     2,381,432     2,371,839     2,361,578
--------------------------------------------------------------------------
                                 $   3,204,364 $   3,142,194 $   2,983,581
--------------------------------------------------------------------------
--------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS'                                             
 EQUITY                                                                   
Current liabilities:                                                      
 Trade, other payables and                                                
  accrued liabilities            $     305,640 $     259,039 $     238,699
 Current maturities on long-term                                          
  debt (note 8)                         50,413        49,965        29,330
 Current maturities on finance                                            
  leases (note 9)                        6,264        11,570        10,655
 Current maturities on other                                              
  long-term liabilities (note 10)       14,804         9,677         4,304
--------------------------------------------------------------------------
                                       377,121       330,251       282,988
Non-current liabilities:                                                  
 Long-term debt (note 8)               881,182       896,976       884,914
 Finance leases (note 9)                61,062        67,842        79,506
 Other long-term liabilities                                              
  (note 10)                            132,170       140,570        97,509
 Deferred income tax liabilities       296,655       295,431       290,390
--------------------------------------------------------------------------
                                     1,371,069     1,400,819     1,352,319
Equity:                                                                   
 Capital stock                         442,305       440,092       427,792
 Contributed surplus                    25,123        25,393        26,981
 Retained earnings                     835,559       815,320       776,139
 Accumulated other comprehensive                                          
  loss                                 (21,087)      (26,093)      (19,910)
--------------------------------------------------------------------------
 Shareholders' equity                1,281,900     1,254,712     1,211,002
 Non-controlling interests             174,274       156,412       137,272
--------------------------------------------------------------------------
 Total equity                        1,456,174     1,411,124     1,348,274
--------------------------------------------------------------------------
                                 $   3,204,364 $   3,142,194 $   2,983,581
--------------------------------------------------------------------------
--------------------------------------------------------------------------
See accompanying notes to condensed consolidated interim financial
statements. 
Methanex Corporation
Consolidated Statements of Changes in Equity (unaudited)
(thousands of U.S. dollars, except number of common shares)
                                 Number                                    
                                     of                  Contri-           
                                 Common     Capital       buted    Retained
                                 Shares       Stock     Surplus    Earnings
---------------------------------------------------------------------------
Balance, January 1, 2010     92,108,242  $  427,792   $  26,981  $  776,139
 Net income                           -           -           -      27,045
 Other comprehensive income           -           -           -           -
 Compensation expense                                                      
  recorded for
  stock options                       -           -         575           -
 Issue of shares on                                                        
  exercise of                                                              
  stock options                  60,340         679           -           -
 Reclassification
  of grant date                                                            
  fair value on
  exercise of                                                              
  stock options                       -         143        (143)          -
 Dividend payments to Methanex
  Corporation shareholders            -           -           -     (14,285)
 Capital contributions by
  non-controlling interests           -           -           -           -
---------------------------------------------------------------------------
Balance, March 31, 2010      92,168,582     428,614      27,413     788,899
 Net income                           -           -           -      70,475
 Other comprehensive loss             -           -           -      (1,139)
 Compensation expense                                                      
  recorded for stock
  options                             -           -         900           -
 Issue of shares on                                                        
  exercise of                                                              
  stock options                 463,440       8,558           -           -
 Reclassification of
  grant date fair
  value on exercise                                                  
  of stock options                    -       2,920      (2,920)          -
 Dividend payments to Methanex
  Corporation shareholders            -           -           -     (42,915)
 Dividend payments to                                                      
  non-controlling interests           -           -           -           -
 Capital contributions by
  non-controlling interests           -           -           -           -
---------------------------------------------------------------------------
Balance, December 31, 2010   92,632,022     440,092      25,393     815,320
  Net income                          -           -           -      34,610
  Other comprehensive                                                      
   income                             -           -           -           -
  Compensation expense                                                     
   recorded for
   stock options                      -           -         287           -
  Issue of shares on                                                       
   exercise of                                                             
   stock options                106,503       1,656           -           -
  Reclassification
   of grant date                                                           
   fair value on exercise                                                 
   of stock options                   -         557        (557)          -
  Dividend payments to Methanex
   Corporation shareholders           -           -           -     (14,371)
  Capital contributions by
   non-controlling interests          -           -           -           -
---------------------------------------------------------------------------
Balance, March 31, 2011      92,738,525  $  442,305   $  25,123  $  835,559
---------------------------------------------------------------------------
---------------------------------------------------------------------------
                                 Accumu                                    
                                  lated                                    
                                  Other                                    
                                 Compre-      Share-        Non-            
                                hensive    holders' Controlling       Total
                                   Loss      Equity   Interests      Equity
---------------------------------------------------------------------------
Balance, January 1, 2010     $  (19,910) $1,211,002   $ 137,272  $1,348,274
 Net income                           -      27,045        (825)     26,220
 Other comprehensive income         452         452         133         585
 Compensation expense                                                      
  recorded for
  stock options                       -         575           -         575
 Issue of shares on                                                        
  exercise of                                                              
  stock options                       -         679           -         679
 Reclassification of grant                                                 
  date fair value on
  exercise of                                                              
  stock options                       -           -           -           -
 Dividend payments to Methanex
  Corporation shareholders            -     (14,285)          -     (14,285)
 Capital contributions by
  non-controlling interests           -           -       6,600       6,600
---------------------------------------------------------------------------
Balance, March 31, 2010         (19,458)  1,225,468     143,180   1,368,648
 Net income                           -      70,475      (1,165)     69,310
 Other comprehensive loss        (6,635)     (7,774)     (4,253)    (12,027)
 Compensation expense                                                      
  recorded for
  stock options                       -         900           -         900
 Issue of shares on                                                        
  exercise of                                                              
  stock options                       -       8,558           -       8,558
 Reclassification of
  grant date fair
  value on exercise                                                  
  of stock options                    -           -           -           -
 Dividend payments to Methanex
  Corporation shareholders            -     (42,915)          -     (42,915)
 Dividend payments to                                                      
  non-controlling interests           -           -        (750)       (750)
 Capital contributions by
  non-controlling interests           -           -      19,400      19,400
---------------------------------------------------------------------------
Balance, December 31, 2010      (26,093)  1,254,712     156,412   1,411,124
  Net income                          -      34,610      (1,076)     33,534
  Other comprehensive                                                      
   income                         5,006       5,006       3,338       8,344
  Compensation expense                                                     
   recorded for
   stock options                      -         287           -         287
  Issue of shares on                                                       
   exercise of                                                             
   stock options                      -       1,656           -       1,656
  Reclassification of
   grant date fair
   value on exercise                                                 
   of stock options                   -           -           -           -
  Dividend payments to Methanex
   Corporation shareholders           -     (14,371)          -     (14,371)
  Capital contributions by
   non-controlling interests          -           -      15,600      15,600
---------------------------------------------------------------------------
Balance, March 31, 2011       $ (21,087) $1,281,900   $ 174,274  $1,456,174
---------------------------------------------------------------------------
---------------------------------------------------------------------------
See accompanying notes to condensed consolidated interim financial
statements.
Methanex Corporation                                                       
Consolidated Statements of Cash Flows (unaudited)                         
(thousands of U.S. dollars)                                                
                                                       Three Months Ended
                                              -----------------------------
                                                      Mar 31         Mar 31
                                                        2011           2010
---------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES                                       
  Net income                                  $       33,534 $       26,220
  Add (deduct) non-cash items:                                             
   Depreciation and amortization                      29,700         35,085
   Income tax expense                                  9,499         12,835
   Share based compensation                           10,080         13,396
   Finance costs                                      9,193          8,052
   Other                                                  31            542
  Income taxes paid                                   (6,669)        (1,770)
  Other cash payments, including                                           
   share-based compensation                           (5,334)        (3,162)
---------------------------------------------------------------------------
  Cash flows from operating                                                
   activities before undernoted                       80,034         91,198
  Changes in non-cash working                                              
   capital (note 15)                                  44,486        (22,177)
---------------------------------------------------------------------------
                                                     124,520         69,021
---------------------------------------------------------------------------
 CASH FLOWS FROM FINANCING                                                 
  ACTIVITIES                                                               
  Dividend payments                                  (14,371)       (14,285)
  Interest paid, including interest                                        
   rate swap settlements                             (25,400)       (24,720)
  Repayment of limited recourse debt                 (16,199)          (313)
  Equity contributions by non-                                             
   controlling interests                              15,600          6,600
  Proceeds from limited recourse debt                      -         31,600
  Proceeds on issue of shares on                                           
   exercise of stock options                           1,656            679
  Repayment of finance leases,                                             
   including other long term                                               
   liabilities                                        (1,331)        (2,911)
---------------------------------------------------------------------------
                                                     (40,045)        (3,350)
---------------------------------------------------------------------------
 CASH FLOWS FROM INVESTING                                                 
  ACTIVITIES                                                               
  Property, plant and equipment                      (39,460)       (31,191)
  Oil and gas assets                                  (5,600)        (9,326)
  GeoPark financing, net of                                                
   repayments                                          5,097          2,929
  Changes in non-cash working                                              
   capital related to investing                                            
   activities                        (note 15)         1,499         (1,568)
---------------------------------------------------------------------------
                                                     (38,464)       (39,156)
---------------------------------------------------------------------------
  Increase in cash and cash                                                
   equivalents                                        46,011         26,515
  Cash and cash equivalents,                                               
   beginning of period                               193,794        169,788
---------------------------------------------------------------------------
  Cash and cash equivalents,
   end of period                              $      239,805 $      196,303
---------------------------------------------------------------------------
---------------------------------------------------------------------------
See accompanying notes to condensed consolidated interim financial
statements.

Methanex Corporation

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

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

1. Nature of Operations:

Methanex Corporation (the Company) is an incorporated entity with corporate offices in Vancouver, Canada. The Company's operations consist of the production and sale of methanol, a commodity chemical. The Company is the world's largest supplier of methanol to the major international markets of Asia Pacific, North America, Europe and Latin America.

2. Significant accounting policies:

a) Statement of Compliance:

These condensed consolidated interim financial statements are prepared in accordance with International Accounting Standards (IAS) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB). These are the Company's first International Financial Reporting Standards (IFRS) condensed consolidated interim financial statements and IFRS 1, First Time Adoption of IFRS has been applied, as they are part of the period covered by the Company's first IFRS consolidated financial statements for the year ending December 31, 2011. The condensed consolidated interim financial statements do not include all of the information required for full annual financial statements and were approved and authorized for issue by the Audit, Finance & Risk Committee of the Board of Directors on April 27, 2011.

The Company's condensed consolidated interim financial statements were prepared in accordance with accounting principles generally accepted in Canada (Canadian GAAP) until December 31, 2010. Canadian GAAP differs from IFRS in some areas and accordingly, the significant accounting policies applied in the preparation of these condensed consolidated interim financial statements are set out below and have been consistently applied to all periods presented except in instances where IFRS 1 either requires or permits an exemption. An explanation of how the transition from Canadian GAAP to IFRS has affected the reported consolidated statements of income, comprehensive income, financial position, and cash flows of the Company is provided in note 18. This note includes information on the provisions of IFRS 1 and the exemptions that the Company elected to apply, reconciliations of equity, net income and comprehensive income for comparative periods and equity at the date of transition, January 1, 2010.

b) Basis of presentation and consolidation:

These condensed consolidated interim financial statements include the accounts of the Company, its wholly owned subsidiaries, less than wholly owned entities for which it has a controlling interest and its proportionate share of the accounts of jointly controlled entities. Wholly owned subsidiaries are entities in which the Company has control, directly or indirectly, where control is defined as the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. For less than wholly owned entities for which the Company has a controlling interest, a non-controlling interest is included in the Company's condensed consolidated interim financial statements and represents the non-controlling shareholders' interest in the net assets of the entity. The Company also consolidates any special purpose entity where the substance of the relationship indicates the Company has control. All significant intercompany transactions and balances have been eliminated. Preparation of these condensed consolidated interim financial statements requires estimates, judgements and assumptions that affect amounts reported and disclosed in the financial statements and related notes. The areas of estimation and judgement that management considers most significant are property, plant and equipment (note 2(g)), site restoration costs (note 2(j)), financial instruments (note 2(o)), and income taxes (note 2(p)). Actual results could differ from those estimates.

c) Reporting currency and foreign currency translation:

Functional currency is the currency of the primary economic environment in which an entity operates. The majority of the Company's business is transacted in US dollars and, accordingly, these condensed consolidated interim financial statements have been measured and expressed in that currency. The Company translates foreign currency denominated monetary items at the rates of exchange prevailing at the balance sheet dates, foreign currency denominated non- monetary items at historic rates, and revenues and expenditures at the rates of exchange at the dates of the transactions. Foreign exchange gains and losses are included in earnings.

d) Cash equivalents:

Cash equivalents include securities with maturities of three months or less when purchased.

e) Receivables:

The Company provides credit to its customers in the normal course of business. The Company performs ongoing credit evaluations of its customers and maintains reserves for potential credit losses. The Company records an allowance for doubtful accounts or writes down the receivable to estimated net realizable value if not collectible in full. Credit losses have historically been within the range of management's expectations.

f) Inventories:

Inventories are valued at the lower of cost and estimated net realizable value. Cost is determined by the first-in first-out basis and includes direct purchase costs, cost of production, allocation of production overhead based on normal operating capacity and transportation.

g) Property, plant and equipment:

Initial Recognition

Property, plant and equipment are initially recorded at cost. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located and borrowing costs on self- constructed assets that meet certain criteria. Borrowing costs, including the impact of related cash flow hedges, incurred during construction and commissioning are capitalized until the plant is operating in the manner intended by management.

Subsequent costs

Routine repairs and maintenance costs are expensed as incurred. At regular intervals, the Company conducts a planned shutdown and inspection (turnaround) at its plants to perform major maintenance and replacements of catalyst. Costs associated with these shutdowns are capitalized and amortized over the period until the next planned turnaround.

Depreciation

Depreciation and amortization is generally provided on a straight-line basis or on a unit-of-natural gas consumption basis, at rates calculated to amortize the cost of property, plant and equipment from the commencement of commercial operations over their estimated useful lives to estimated residual value. The estimated useful life of the Company's buildings, plant installations and machinery is 5 to 25 years.

The Company reviews the depreciation and amortization rates of property, plant and equipment on an annual basis and, if necessary, changes are accounted for prospectively.

Assets under finance lease are depreciated to their estimated residual value based on the shorter of their useful lives and the lease term.

Oil and Gas Properties

Costs incurred for oil and natural gas properties with proven reserves are capitalized to property, plant and equipment, including the reclassification of associated exploration costs. These costs are depreciated using a unit-of-production method, taking into consideration both estimated future costs in developing reserves and estimated proven reserves. Proven and probable reserves for oil and natural gas properties are estimated based on independent reserve reports and represent the estimated quantities of natural gas which are considered commercially feasible. These reserve estimates are used to determine depreciation and to assess the carrying value of oil and natural gas properties. The accounting for costs incurred for oil and natural gas exploration properties with unproven reserves are described in note 2(h).

Impairment

The Company reviews the carrying value of property, plant and equipment for impairment when circumstances indicate an asset's carrying value may not be recoverable. Examples of such events or changes in circumstances related to our long-lived assets include, but are not restricted to: a significant adverse change in the extent or manner in which the asset is being used or in its physical condition; a significant change in the price or availability of natural gas feedstock required to manufacture methanol; a significant adverse change in oil and gas reserve estimates; a significant adverse change in legal factors or in the business climate that could affect the asset's value, including an adverse action or assessment by a foreign government that impacts the use of the asset; or a current-period operating or cash flow loss combined with a history of operating or cash flow losses, or a projection or forecast that demonstrates continuing losses associated with the asset's use. If any such indication of impairment exists, the Company makes an assessment of the recoverable amount, by comparing the carrying value to the higher of fair value and the asset's value in use. The asset's value in use is determined as the present value of the expected future cash flows less expected costs for the disposal of the asset. An impairment write-down is recorded for the difference between the carrying amount and the higher of fair value and the asset's value in use. An impairment write-down recognized in prior periods for an asset is reversed if there has been a subsequent recovery in the value of the asset due to changes in events and circumstances.

h) Other assets:

Intangible assets are capitalized to other assets and amortized to depreciation and amortization expense on an appropriate basis to charge the cost of the assets against earnings.

Financing fees related to undrawn credit facilities are capitalized to other assets and amortized to interest expense over the term of the credit facility. Financing fees related to project debt facilities are capitalized to other assets until the project debt is fully drawn. Once the project debt is fully drawn, these fees are reclassified to long-term debt net of financing fees and amortized to interest expense over the repayment term on an effective interest basis.

Costs incurred for oil and natural gas exploration properties with unproven reserves are capitalized to other assets. Upon recognition of proved reserves and internal approval for development, these costs are transferred to property, plant and equipment and are depreciated using a unit-of-production method based on estimated proved reserves.

The Company reviews the carrying value of other assets for impairment when circumstances indicate that an asset's carrying value may not be recoverable.

i) Leases:

Leasing contracts are classified as either financing or operating leases. Where the contracts are classified as operating leases, payments are charged to income in the year they are incurred. A lease is classified as a finance lease if it transfers substantially all of the risks and rewards of ownership of the leased asset. The asset and liability associated with a finance lease are recorded at the lower of fair value and the present value of the minimum lease payments, net of executory costs. Lease payments are apportioned between interest expense and repayments of the liability.

j) Site restoration costs:

The Company recognizes a liability to dismantle and remove assets or to restore a site upon which the assets are located. The Company estimates the fair value of the liability by determining the current market cost required to settle the site restoration costs and adjusts for inflation through to the expected date of the expenditures and discounts this amount back to the date when the obligation was originally incurred. As the liability is initially recorded on a discounted basis, it is increased each period until the estimated date of settlement. The resulting expense is referred to as accretion expense and is included in finance costs. The Company reviews asset retirement obligations and adjusts the liability as necessary to reflect changes in the estimated future cash flows, timing, inflation and discount rates underlying the fair value measurement. Inherent uncertainties exist in the estimate of the obligations because the restoration activities will take place in the future and there may be changes in governmental and environmental regulations and changes in removal technology and costs. Because of uncertainties related to estimating the cost and timing of future site restoration activities, future costs could differ materially from the amounts estimated.

k) Employee future benefits:

The Company has non-contributory defined benefit pension plans covering certain employees and defined contribution pension plans. The Company does not provide any significant post-retirement benefits other than pension plan benefits. For defined benefit pension plans, the net of the present value of the defined benefit obligation and the fair value of plan assets is recorded to the statement of financial position. The determination of the defined benefit obligation and associated pension cost is based on certain actuarial assumptions including inflation rates, salary growth, longevity and expected return on plan assets. The present value of the defined benefit obligation is determined by discounting estimated future cash flows using current market bond yields which have terms to maturity approximating the terms of the obligation. Actuarial gains and losses arising from differences between these assumptions and actual results are recognized in other comprehensive income, and recorded in retained earnings. The cost for defined contribution benefit plans is recognized in net income as earned by the employees.

l) Net income per common share:

The Company calculates basic net income per common share by dividing net income by the weighted average number of common shares outstanding and calculates diluted net income per common share under the treasury stock method. Under the treasury stock method, the weighted average number of common shares outstanding for the calculation of diluted net income per share assumes that the total of the proceeds to be received on the exercise of dilutive stock options is applied to repurchase common shares at the average market price for the period. Stock options are dilutive only when the average market price of common shares during the period exceeds the exercise price of the stock option.

m) Share-based payments:

The Company grants share-based awards as an element of compensation. Share-based awards granted by the Company can include stock options, tandem share appreciation rights, share appreciation rights, deferred share units, restricted share units or performance share units.

For stock options granted by the Company, the cost of the service received as consideration is measured based on an estimate of the fair value at the date of grant. The grant-date fair value is recognized as compensation expense over the related service period with a corresponding increase in contributed surplus. On the exercise of stock options, consideration received, together with the compensation expense previously recorded to contributed surplus, is credited to share capital. The Company uses the Black-Scholes option pricing model to estimate the fair value of each stock option tranche at the date of grant.

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. Tandem share appreciation rights gives the holder the choice between exercising a regular stock option or share appreciation right. For share appreciation rights and tandem share appreciation rights, the cost of the service received as consideration is initially measured based on an estimate of the fair value at the date of grant. The grant-date fair value is recognized as compensation expense over the related service period with a corresponding increase in liabilities. For share appreciation rights and tandem share appreciation rights, the cost of the service is re- measured at each reporting date based on an estimate of the fair value with changes in fair value recognized as compensation expense for the proportion of the service that has been rendered at that date. The Company uses the Black-Scholes option pricing model to estimate the fair value for share appreciation rights and tandem share appreciation rights.

Deferred, restricted and performance share units are grants of notional common shares that are redeemable for cash 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. For deferred, restricted and performance share units, the cost of the service received as consideration is initially measured based on the market value of the Company's common shares at the date of grant. The grant-date fair value is recognized as compensation expense over the related service period with a corresponding increase in liabilities. Deferred, restricted and performance share units are re-measured at each reporting date based on the market value of the Company's common shares with changes in fair value recognized as compensation expense for the proportion of the service that has been rendered at that date.

Additional information related to the stock option plan, the assumptions used in the Black-Scholes option pricing model, tandem share appreciation rights, share appreciation rights and the deferred, restricted and performance share units of the Company are described in note 14.

n) Revenue recognition:

Revenue is recognized based on individual contract terms when the title and risk of loss to the product transfers to the customer, which usually occurs at the time shipment is made. Revenue is recognized at the time of delivery to the customer's location if the Company retains title and risk of loss during shipment. For methanol shipped on a consignment basis, revenue is recognized when the customer consumes the methanol. For methanol sold on a commission basis, the commission income is included in revenue when earned.

o) Financial instruments:

Financial instruments are classified into one of five categories and, depending on the category, will either be measured at amortized cost or fair value. Held-to-maturity investments, loans and receivables and other financial liabilities are measured at amortized cost. Financial assets and liabilities through profit and loss (held for trading category) and available-for-sale financial assets are measured on the balance sheet at fair value. Changes in the fair value of held-for- trading financial assets and liabilities are recognized in earnings and changes in the fair value of available-for-sale financial assets are recorded in other comprehensive income until the investment is derecognized or impaired at which time the amounts would be recorded in earnings. The Company classifies its cash and cash equivalents as held-for- trading. Trade and other receivables are classified as loans and receivables. Trade, other payables and accrued liabilities, long-term debt, net of financing costs, and other long-term liabilities are classified as other financial liabilities.

Under these standards, derivative financial instruments, including embedded derivatives, are classified as held for trading and are recorded on the balance sheet at fair value unless exempted. The valuation of derivative financial instruments is a critical accounting estimate due to the complex nature of these products, the degree of judgment required to appropriately value these products and the potential impact of such valuation on the Company's financial statements. The Company records all changes in fair value of derivative financial instruments in earnings unless the instruments are designated as cash flow hedges. The Company enters into and designates as cash flow hedges certain forward exchange purchase and sales contracts to hedge foreign exchange exposure on anticipated sales. The Company also enters into and designates as cash flow hedges certain interest rate swap contracts to hedge variable interest rate exposure on its limited recourse debt. The Company assesses at inception and on an ongoing basis whether the hedges are and continue to be effective in offsetting changes in the cash flows of the hedged transactions. The effective portion of changes in the fair value of these hedging instruments is recognized in other comprehensive income. Any gain or loss in fair value relating to the ineffective portion is recognized immediately in earnings. Until settled, the fair value of the derivative financial instruments will fluctuate based on changes in variable interest rates.

p) Income taxes:

Income tax expense represents current tax and deferred tax. The Company records current tax based on the taxable profits for the period which is calculated using tax rates that have been enacted or substantively enacted by the reporting date.

Deferred income taxes are accounted for using the liability method. The liability method requires that income taxes reflect the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities and their tax bases. Deferred income tax assets and liabilities are determined for each temporary difference based on currently enacted or substantially enacted tax rates that are expected to be in effect when the underlying items of income or expense are expected to be realized. The effect of a change in tax rates or tax legislation is recognized in the period of substantive enactment. Deferred tax assets, such as non-capital loss carryforwards, are recognized to the extent it is probable that taxable profit will be available against which the asset can be utilized.

The Company accrues for taxes that will be incurred upon distributions from its subsidiaries when it is probable that the earnings will be repatriated.

The determination of income taxes requires the use of judgment and estimates. If certain judgments or estimates prove to be inaccurate, or if certain tax rates or laws change, the Company's results of operations and financial position could be materially impacted.

q) Provisions and contingencies:

Provisions are recognized where a legal or constructive obligation has been incurred as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation.

r) Segmented information:

The Company's operation consists of the production and sale of methanol, which constitutes a single operating segment.

3. Trade and other receivables:

                                              Mar 31     Dec 31      Jan 1
                                                2011       2010       2010
--------------------------------------------------------------------------
Trade                                      $ 286,412  $ 257,945  $ 191,002
Value-added and other tax receivables         38,572     43,495     56,264
Current portion of GeoPark financing
 (note 7)                                     10,339      8,800      8,086
Other                                          9,703      9,787      2,066
--------------------------------------------------------------------------
                                           $ 345,026  $ 320,027  $ 257,418
--------------------------------------------------------------------------
--------------------------------------------------------------------------

4. 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 expenses and depreciation and amortization for the three months ended March 31, 2011 is $507 million (2010 - $362 million).

5. Property, plant and equipment:

                             Buildings,
                                  Plant         Oil &
                          Installations           Gas
                            & Machinery    Properties     Other       Total
---------------------------------------------------------------------------
Cost at March 31, 2011       $3,148,513      $ 55,786  $ 82,390  $3,286,689
Accumulated depreciation at
 March 31, 2011                 953,845        22,625    37,376   1,013,846
---------------------------------------------------------------------------
Net book value at
 March 31, 2011              $2,194,668      $ 33,161  $ 45,014  $2,272,843
---------------------------------------------------------------------------
Cost at December 31, 2010    $3,097,928      $ 54,049  $116,203  $3,268,180
Accumulated depreciation at 
 December 31, 2010              929,079        20,092    60,433   1,009,604
---------------------------------------------------------------------------
Net book value at
 December 31, 2010           $2,168,849      $ 33,957  $ 55,770  $2,258,576
---------------------------------------------------------------------------
Cost at January 1, 2010      $2,964,424      $ 39,990  $127,623  $3,132,037
Accumulated depreciation at                                        
 January 1, 2010                832,421         4,560    68,383     905,364
---------------------------------------------------------------------------
Net book value at
 January 1, 2010             $2,132,003      $ 35,430  $ 59,240  $2,226,673
---------------------------------------------------------------------------
---------------------------------------------------------------------------

6. 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 condensed consolidated interim financial statements are the following amounts representing the Company's proportionate interest in Atlas:

                                                   Mar 31   Dec 31    Jan 1
Consolidated Statements of Financial Position        2011     2010     2010
---------------------------------------------------------------------------
Cash and cash equivalents                        $ 15,681 $ 10,676 $  8,252
Other current assets                              110,044   83,795   72,667
Property, plant and equipment                     272,006  276,114  287,727
Other assets                                       12,548   12,548   12,920
Trade, other payables and accrued liabilities      41,977   23,934   22,380
Long-term debt, including current maturities
 (note 8)                                          79,674   79,577   93,155
Finance leases and other long-term liabilities,                           
 including current maturities                      51,477   52,480   55,139
Deferred income tax liabilities                    18,985   18,893   16,449
---------------------------------------------------------------------------
---------------------------------------------------------------------------
                                                     Three Months Ended   
                                            -------------------------------
                                                    Mar 31           Mar 31
Consolidated Statements of Income                     2011             2010
---------------------------------------------------------------------------
Revenue                                     $       71,578         $ 52,836
Expenses                                           (59,888)         (47,177)
---------------------------------------------------------------------------
Income before income taxes                          11,690            5,659
Income tax expense                                  (1,773)          (1,152)
---------------------------------------------------------------------------
Net income                                  $        9,917         $  4,507
---------------------------------------------------------------------------
                                                      Three Months Ended
                                            -------------------------------
                                                    Mar 31           Mar 31 
Consolidated Statements of Cash Flows                 2011             2010 
---------------------------------------------------------------------------
Cash inflows from operating activities       $       8,035        $  13,387
Cash outflows from financing activities             (1,662)          (1,810)
Cash outflows from investing activities             (1,368)            (516)
---------------------------------------------------------------------------
---------------------------------------------------------------------------

7. Other assets:

                                                 Mar 31    Dec 31     Jan 1
                                                   2011      2010      2010
---------------------------------------------------------------------------
Oil and gas assets                             $ 42,432  $ 38,585  $ 28,412
GeoPark financing                                10,432    17,068    37,969
Marketing and production rights, net of                                   
 accumulated amortization                        10,608    11,600    19,099
Restricted cash for debt service
 reserve account                                 12,548    12,548    12,920
Deferred financing costs , net of                                         
 accumulated amortization                         1,592     1,791     9,725
Defined benefit pension plans                     5,041     5,382     5,392
Other                                            25,936    26,289    21,388
---------------------------------------------------------------------------
                                               $108,589  $113,263  $134,905
---------------------------------------------------------------------------
---------------------------------------------------------------------------

For the three months ended March 31, 2011, amortization of marketing and production rights included in depreciation and amortization was $1.0 million (2010 - $1.9 million) and amortization of deferred financing fees included in finance costs was $0.2 million (2010 - $0.4 million).

The Company has provided funding to GeoPark Chile Limited (GeoPark) in the amount of $57 million (of which $37 million has been repaid at March 31, 2011) to support and accelerate GeoPark's natural gas exploration and development activities in the Fell block in southern Chile. GeoPark agreed to supply the Company with all natural gas sourced from the Fell block under a ten-year exclusive supply arrangement. As at March 31, 2011, the outstanding balance is $20.8 million of which $10.3 million, representing the current portion, has been recorded in trade and other receivables.

Costs incurred for oil and natural gas exploration properties with unproven reserves are capitalized to other assets. Upon recognition of proved reserves and internal approval for development, these costs are transferred to property, plant and equipment.

8. Long-term debt:

                                               Mar 31     Dec 31      Jan 1
                                                 2011       2010       2010
---------------------------------------------------------------------------
Unsecured notes                                                          
 8.75% due August 15, 2012                  $ 199,240  $ 199,112  $ 198,627
 6.00% due August 15, 2015                    148,959    148,908    148,705
---------------------------------------------------------------------------
                                              348,199    348,020    347,332
Atlas limited recourse debt facilities         79,674     79,577     93,155
Egypt limited recourse debt facilities        484,697    499,706    461,570
Other limited recourse debt facilities         19,025     19,638     12,187
---------------------------------------------------------------------------
                                              931,595    946,941    914,244
Less current maturities                       (50,413)   (49,965)   (29,330)
---------------------------------------------------------------------------
                                            $ 881,182  $ 896,976  $ 884,914
---------------------------------------------------------------------------
---------------------------------------------------------------------------

During the three months ended March 31, 2011, the Company made repayments on its Egypt limited recourse debt facilities of $15.6 million, and other limited recourse debt facilities of $0.6 million.

The covenants governing the Company's unsecured notes apply to the Company and its subsidiaries excluding the Atlas joint venture and Egypt entity ("limited recourse subsidiaries") and include restrictions on liens and sale and lease-back transactions, or merger or consolidation with another corporation or sale of all or substantially all of the Company's assets. The indenture also contains customary default provisions.

The Company has a $200 million unsecured revolving bank facility provided by highly rated financial institutions that expires in May 2012 and that contains covenant and default provisions in addition to those of the unsecured notes as described above. Significant covenants and default provisions under this facility include:

a) the obligation to maintain an EBITDA to interest coverage ratio of     
   greater than 2:1 and a debt to capitalization ratio of less than or    
   equal to 50%, calculated on a four quarter trailing average basis in   
   accordance with definitions in the credit agreement which include      
   adjustments related to the limited recourse subsidiaries,              
b) a default if payment on any indebtedness of $10 million or more of the 
   Company and its subsidiaries except for the limited recourse           
   subsidiaries is accelerated by the creditor, and                       
c) a default if a default occurs on any other indebtedness of $50 million 
   or more of the Company and its subsidiaries except for the limited     
   recourse subsidiaries that permits the creditor to demand repayment.   

The Atlas and Egypt limited recourse debt facilities are described as limited recourse as they are secured only by the assets of the Atlas joint venture and the Egypt entity, respectively. Accordingly, the lenders to the limited recourse debt facilities have no recourse to the Company or its other subsidiaries. The Atlas and Egypt limited recourse debt facilities have customary covenants and default provisions which apply only to these entities including restrictions on the incurrence of additional indebtedness and a requirement to fulfill certain conditions before the payment of cash or other distributions. The Egypt limited recourse debt facilities also require that certain conditions associated with completion of plant construction and commissioning be met by no later than September 30, 2011. These conditions include a 90-day plant reliability test and finalization of certain land title registrations and related mortgages that require action by Egyptian governmental entities.

Failure to comply with any of the covenants or default provisions of the long-term debt facilities described above could result in a default under the applicable credit agreement which would allow the lenders to not fund future loan requests and to accelerate the due date of the principal and accrued interest on any outstanding loans.

At March 31, 2011, management believes the Company was in compliance with all of the covenants and default provisions referred to above.

9. Finance leases:

                                             Mar 31      Dec 31       Jan 1
                                               2011        2010        2010
---------------------------------------------------------------------------
Finance lease obligations                $   67,326  $   79,412  $   90,161
Less current maturities                      (6,264)    (11,570)    (10,655)
---------------------------------------------------------------------------
                                         $   61,062  $   67,842  $   79,506
---------------------------------------------------------------------------
---------------------------------------------------------------------------

At March 31, 2011, the Company has finance lease obligations related to oxygen production facilities in Trinidad. The liabilities mature as follows until the expiry of the lease:

                                                               Reduction of
                                                                 obligation
                                                                      under
                                              Lease    Interest     finance
                                           payments   component       lease
---------------------------------------------------------------------------
2011                                    $    11,523  $    5,259  $    6,264
2012                                         11,617       4,748       6,869
2013                                         11,715       4,187       7,528
2014                                         11,815       3,574       8,241
2015                                          9,164       2,954       6,210
Thereafter                                   42,414      10,200      32,214
---------------------------------------------------------------------------
                                        $    98,248  $   30,922  $   67,326
---------------------------------------------------------------------------
---------------------------------------------------------------------------

10. Other long-term liabilities:

                                             Mar 31      Dec 31       Jan 1
                                               2011        2010        2010
---------------------------------------------------------------------------
Site restoration costs(a)               $    23,903  $   23,951  $   21,033
Share-based payment liability (note 14)      57,999      52,987      21,672
Chile retirement plan                        29,928      29,821      25,824
Fair value of derivative financial                                          
 instruments (note 16)                       35,144      43,488      33,284
---------------------------------------------------------------------------
                                            146,974     150,247     101,813
Less current maturities                     (14,804)     (9,677)     (4,304)
---------------------------------------------------------------------------
                                        $   132,170  $  140,570  $   97,509
---------------------------------------------------------------------------
---------------------------------------------------------------------------

a) Site restoration costs:

At March 31, 2011, the total undiscounted amount of estimated cash flows required to settle the liabilities was $32.2 million (2010 - $32.4 million). The movement in the provision during the period is explained as follows:

                                                         Mar 31      Dec 31
                                                           2011        2010
---------------------------------------------------------------------------
Opening balance                                     $    23,951  $   21,033
New or revised provisions(1)                               (177)      2,595
Amounts charged against provisions                            -        (346)
Accretion expense                                           129         669
---------------------------------------------------------------------------
Closing balance                                     $    23,903  $   23,951
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(1) Includes the impact of changes in discount rates and estimated site
remediation costs.

11. Expenses by function:

                                                     Three Months Ended
                                                 --------------------------
                                                        Mar 31       Mar 31
                                                          2011         2010
---------------------------------------------------------------------------
Cost of sales                                     $    480,021  $   337,666
Selling and distribution                                75,036       66,583
Administrative expenses                                 16,583       16,610
---------------------------------------------------------------------------
Total expenses by function                        $    571,640  $   420,859
---------------------------------------------------------------------------
Cost of sales and operating expenses                   541,940      385,774
Depreciation and amortization                           29,700       35,085
---------------------------------------------------------------------------
Total expenses per Consolidated Statements of                               
 Income                                           $    571,640  $   420,859
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Included in total expenses for the three months ended March 31, 2011 are employee expenses of $43.0 million (2010- $39.2 million).

12. Finance costs:

                                                      Three Months Ended
                                                   ------------------------
                                                         Mar 31      Mar 31
                                                           2011        2010
---------------------------------------------------------------------------
Finance costs                                       $    16,423  $   17,159
Less: capitalized interest related to Egypt plant                          
 under construction                                      (7,230)     (9,107)
---------------------------------------------------------------------------
                                                    $     9,193  $    8,052
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Finance costs are primarily comprised of interest on borrowings and finance lease obligations, amortization of deferred financing fees, and accretion expense associated with site restoration costs. Interest during construction of the Egypt methanol facility was capitalized until the plant was substantially complete and ready for productive use during the quarter ended March 31, 2011. The Company has secured limited recourse debt for its joint venture project to construct a 1.26 million tonne per year methanol facility in Egypt. The Company has 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 of September 28, 2007 to March 31, 2015. For the three months ended March 31, 2011 interest costs of $7.2 million (2010 - $9.1 million) related to this project were capitalized.

13. Net income per common share:

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

                                                  Three Months Ended   
                                             ------------------------------
                                                      Mar 31         Mar 31
                                                        2011           2010
---------------------------------------------------------------------------
Denominator for basic net income per common                              
 share                                            92,683,755     92,128,325
Effect of dilutive stock options                   1,628,123      1,283,905
---------------------------------------------------------------------------
Denominator for diluted net income per common                            
 share(1)                                         94,311,878     93,412,230
---------------------------------------------------------------------------
---------------------------------------------------------------------------
(1) All outstanding options at March 31, 2011 are dilutive and have been
    included in the diluted weighted average number of common shares
    calculation (2010 - 2,114,462 options have been excluded from the
    diluted weighted average number of common shares calculation as their
    effect would have been anti-dilutive).

The average market value of the Company's shares for purposes of calculating the dilutive effect of stock options was based on quoted market prices for the periods disclosed above.

14. Share-based compensation:

a) Stock options:

i) Outstanding stock options:

Common shares reserved for outstanding stock options at March 31, 2011:

                           Options Denominated       Options Denominated
                                   in CAD                  in USD
                          --------------------  ------------------------
                                      Weighted                  Weighted
                            Number     Average        Number     Average
                          of Stock    Exercise      of Stock    Exercise
                           Options       Price       Options       Price
----------------------------------------------  ------------------------
Outstanding at
 January 1, 2010            55,350    $   7.58     4,998,242   $   18.77
  Granted                        -           -        89,250       25.22
  Exercised                (45,600)       8.19      (478,180)      18.54
  Cancelled                 (7,500)       3.29       (35,055)      15.33
----------------------------------------------  ------------------------
Outstanding at
 December 31, 2010           2,250    $   9.56     4,574,257   $   18.95
  Granted                        -           -        67,800       28.74
  Exercised                 (2,250)       9.56      (104,253)      15.68
  Cancelled                     -            -        (6,470)      13.40
----------------------------------------------  ------------------------
Outstanding at
 March 31, 2011                 -    $       -     4,531,334   $   19.18
----------------------------------------------  ------------------------
----------------------------------------------  ------------------------

Information regarding the stock options outstanding at March 31, 2011 is as follows:

                                                      Options Exercisable
                          Options Outstanding at                 at    
                               March 31, 2011             March 31, 2011
                ----------------------------------  ----------------------
                   Weighted
                    Average       Number
                  Remaining           of  Weighted    Number of   Weighted
                Contractua1        Stock   Average        Stock    Average
Range of               Life      Options  Exercise      Options   Exercise
 Exercise Prices     (Years) Outstanding     Price  Exercisable      Price
--------------------------------------------------  ----------------------
Options denominated
 in USD           
 $6.33 to 11.56         4.6    1,307,575  $   6.54      871,170  $    6.65
 $17.85 to 22.52        1.8    1,220,950     20.28    1,220,950      20.28
 $23.92 to 28.74        3.7    2,002,809     26.76    1,872,176      26.73
--------------------------------------------------  ----------------------
                        3.4    4,531,334  $  19.18    3,964,296  $   20.33
--------------------------------------------------  ----------------------
--------------------------------------------------  ----------------------

(ii) Compensation expense related to stock options:

For the three months ended March 31, 2011, compensation expense related to stock options included in cost of sales and operating expenses was $0.3 million (2010 - $0.5 million). The fair value of the stock option grant was estimated on the date of grant using the Black-Scholes option pricing model.

b) Share appreciation rights and tandem share appreciation rights:

During 2010, the Company's stock option plan was amended to include tandem share appreciation rights (TSARs) and a new plan was introduced for share 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 March 31, 2011:

                                      SARs                 TSARs            
                                ---------------------- ---------------------
                                 Number of    Exercise Number of    Exercise
                                     Units       Price     Units       Price
------------------------------------------------------ ---------------------
Outstanding at January 1, 2010           - $         -         - $         -
 Granted                           394,065       25.22   735,505       25.19
 Exercised                               -           -         -           -
 Cancelled                          (5,100)      25.22         -           -
------------------------------------------------------ ---------------------
Outstanding at December 31, 2010   388,965 $     25.22   735,505 $     25.19
 Granted                           260,010       28.74   492,100       28.74
 Exercised                          (8,730)      25.22    (5,750)      25.22
 Cancelled                          (6,000)      25.22         -           -
------------------------------------------------------ ---------------------
Outstanding at March 31, 2011(1)   634,245 $     26.66 1,221,855 $     26.64
------------------------------------------------------ ---------------------
------------------------------------------------------ ---------------------
(1) At March 31, 2011, 355,010 SARs and TSARs were exercisable. The
    intrinsic value of the exercisable SARs and TSARs at March 31, 2011
    was $2.1 million. 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 fair value and is recognized over the related service period. Changes in fair value each period are recognized in earnings for the proportion of the service that has been rendered at each reporting date. The fair value at March 31, 2011 was $18.0 million compared with the recorded liability of $13.6 million. The difference between the fair value and the recorded liability of $4.4 million will be recognized over the weighted average remaining service period of approximately 2 years. The weighted average fair value of the vested SARs and TSARs was estimated at March 31, 2011 using the Black-Scholes option pricing model.

For the three months ended March 31, 2011, compensation expense related to SARs and TSARs included in cost of sales and operating expenses was $5.0 million (2010 - $3.2 million).

c) Deferred, restricted and performance share units:

Deferred, restricted and performance share units outstanding at March 31, 2011 are as follows:

                                                   Number of
                                    Number of     Restricted      Number of
                               Deferred Share          Share    Performance
                                        Units          Units    Share Units
---------------------------------------------------------------------------
Outstanding at January 1, 2010        505,176         22,478      1,078,812
 Granted                               48,601         29,500        404,630
 Granted in-lieu of dividends          14,132          1,265         28,915
 Redeemed                             (10,722)        (6,639)      (326,840)
 Cancelled                                  -              -        (15,900)
---------------------------------------------------------------------------
Outstanding at December 31,                                                 
 2010                                 557,187         46,604      1,169,617
 Granted                               22,781         17,100        281,470
 Granted in-lieu of dividends           2,900            334          5,786
 Redeemed                                   -              -       (343,931)
 Cancelled                                  -              -         (2,664)
---------------------------------------------------------------------------
Outstanding at March 31, 2011         582,868         64,038      1,110,278
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Compensation expense for deferred, restricted and performance share units is 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 March 31, 2011 was $56.1 million compared with the recorded liability of $44.4 million. The difference between the fair value and the recorded liability of $11.7 million will be recognized over the weighted average remaining service period of approximately 2 years.

For the three months ended March 31, 2011, compensation expense related to deferred, restricted and performance share units included in cost of sales and operating expenses was $4.8 million (2010 - $9.7 million). This included an expense of $0.6 million (2010 - $5.1 million) related to the effect of the change in the Company's share price for the three months ended March 31, 2011.

15. Changes in non-cash working capital:

Changes in non-cash working capital for the three months ended March 31, 2011 were as follows:

                                                    Three Months Ended
                                                ---------------------------
                                                       Mar 31        Mar 31
                                                         2011          2010
---------------------------------------------------------------------------
Decrease (increase) in non-cash working capital:                            
 Trade and other receivables                    $     (24,999)  $   (13,928)
 Inventories                                           19,423         2,076
 Prepaid expenses                                        (990)        3,401
 Trade, other payables and accrued liabilities         46,601       (15,964)
---------------------------------------------------------------------------
                                                       40,035       (24,415)
Adjustments for items not having a cash effect                              
 and working capital changes relating to taxes
 and interest paid                                      5,950           670
---------------------------------------------------------------------------
Changes in non-cash working capital having a                                
 cash effect                                    $      45,985  $    (23,745)
---------------------------------------------------------------------------
These changes relate to the following activities:
 Operating                                      $      44,486  $    (22,177)
 Investing                                              1,499        (1,568)
---------------------------------------------------------------------------
Changes in non-cash working capital             $      45,985  $    (23,745)
---------------------------------------------------------------------------
---------------------------------------------------------------------------

16. Financial instruments:

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

                                             Mar 31      Dec 31       Jan 1
                                               2011        2010        2010
---------------------------------------------------------------------------
Financial assets:                                                           
 Financial asset at fair value through                                      
  profit and loss (held for trading):                                       
  Cash and cash equivalents(1)          $   239,805  $  193,794  $  169,788
  Debt service reserve accounts
   included in other assets(1)               12,548      12,548      12,920
 Loans and receivables:                                                     
  Trade and other receivables, excluding                                    
   current portion                                                          
   of GeoPark financing                     339,530     316,070     249,332
  GeoPark financing, including current                                      
   portion                                   20,771      25,868      46,055
---------------------------------------------------------------------------
Total financial assets(2)               $   612,654  $  548,280  $  478,095
---------------------------------------------------------------------------
Financial liabilities:                                                      
 Other financial liabilities:                                               
  Trade, other payables and accrued                                         
   liabilities                          $   305,640  $  259,039  $  238,699
  Long-term debt, including current                                         
   portion                                  931,595     946,941     914,244
 Financial liabilities at fair value                                        
  through profit and loss (held for                                         
  trading):                                                                 
  Derivative instruments designated as                                      
   cash flow hedges(1)                       35,144      43,488      33,185
  Derivative instruments                          -           -          99
---------------------------------------------------------------------------
Total financial liabilities             $ 1,272,379  $1,249,468  $1,186,227
---------------------------------------------------------------------------
(1) Cash and cash equivalents and debt service reserve accounts are
    measured at fair value based on quoted prices in active markets for
    identical assets and the Egypt interest rate swaps designated as cash
    flow hedges are measured at fair value based on industry accepted
    valuation models and inputs obtained from active markets. 
(2) The carrying amount of the financial assets represents the maximum
    exposure to credit risk at the respective reporting periods.

At March 31, 2011, 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 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 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 $357 million as at March 31, 2011. The notional amounts decrease over the expected repayment period. At March 31, 2011, these interest rate swap contracts had a negative fair value of $35.1 million (2010 - $43.5 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.

17. 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 March 31, 2011 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.

18. Transition to International Financial Reporting Standards:

As stated in note 2, these are the Company's first condensed consolidated interim financial statements. The accounting policies described in note 2 have been applied in preparing the interim financial statements for the three months ended March 31, 2011, the comparative information presented in these interim financial statements for both the three months ended March 31, 2010 and the year ended December 31, 2010 and in the preparation of an opening IFRS statement of financial position at January 1, 2010, the Company's date of transition. An explanation of the IFRS 1, first-time adoption of IFRS exemptions and the required reconciliations between IFRS and Canadian GAAP are described below:

IFRS 1 First-Time Adoption of International Financial Reporting Standards

In preparing these condensed consolidated interim financial statements, the Company has applied 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 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 has elected to apply:

Business combinations

The Company has elected to apply IFRS 3, Business Combinations, prospectively to business combinations that occur after the date of transition. The Company has elected 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

The Company has elected to recognize all cumulative actuarial gains and losses on defined benefit pension plans existing at the date of transition immediately into retained earnings, rather than continuing to defer and amortize into the results of operations. Refer to note 18 (b) for the impact to the financial statements.

Fair value or revaluation as deemed cost

The Company has used the amount determined under a previous GAAP revaluation as the deemed cost for certain assets. The Company elected the exemption for certain assets which were written down under Canadian GAAP, as the revaluation was broadly comparable to fair value under IFRS. The carrying value of those assets on transition to IFRS is therefore, consistent with the Canadian GAAP carrying value on the transition date.

Share-based payments

The Company elected to not apply 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. As a result, the Company has applied IFRS 2 for stock options granted after November 7, 2002 that are not fully vested at January 1, 2010.

Site restoration costs

The Company has elected to apply the IFRS 1 exemption whereby it has measured the site restoration costs 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 the best estimate of the historical risk-free discount rate.

Oil and Gas Properties

The Company has elected to carry forward the Canadian GAAP full cost method of accounting oil and gas asset carrying value as of January 1, 2010 as the balance on transition to IFRS.

Reconciliations between IFRS and Canadian GAAP

IFRS 1 requires an entity to reconcile equity, comprehensive income and cash flow for comparative periods. The Company's adoption of IFRS did not have a significant impact on total operating, investing or financing cash flows in the prior periods. However, it did result in some presentation changes. Under Canadian GAAP, interest paid included in profit and loss was classified as operating activities and capitalized interest was classified as investing activities. Under IFRS, interest paid, including capitalized interest, is classified as financing activities. There were no other significant adjustments to the statement of cash flows. In preparing these condensed consolidated interim financial statements, the Company has adjusted amounts reported previously in financial statements prepared in accordance with Canadian GAAP. An explanation of how the transition from Canadian GAAP to IFRS has affected the Company's statements of financial position, income, and comprehensive income is provided below:

Reconciliation of Assets, Liabilities and Equity

The below table provides a summary of the adjustments to the Company's statement of financial position at December 31, 2010, March 31, 2010 and January 1, 2010:

                                             Dec 31      Mar 31       Jan 1
                                               2010        2010        2010
---------------------------------------------------------------------------
Total assets per Canadian GAAP          $ 3,070,159  $2,964,875  $2,923,417
 Leases(a)                                   55,114      59,621      61,095
 Employee benefits(b)                       (10,625)    (10,107)    (10,611)
 Site restoration costs(c)                    3,595       1,285       1,285
 Borrowing costs(d)                          23,951      15,774       8,269
 Other                                            -         889         126
---------------------------------------------------------------------------
Total assets per IFRS                   $ 3,142,194  $3,032,337  $2,983,581
---------------------------------------------------------------------------
Total liabilities per Canadian GAAP     $ 1,793,532  $1,716,444  $1,687,331
 Leases(a)                                   68,657      72,884      74,240
 Employee benefits(b)                         5,658       5,787       6,038
 Site restoration costs(c)                    7,708       4,924       4,901
 Borrowing costs(d)                           9,580       6,309       3,307
 Uncertain tax positions(e)                   7,158       5,431       5,365
 Share-based payments(f)                      5,738       3,784         261
 Deferred tax impact and other                                              
  adjustments(g)                            (10,549)     (8,694)     (8,863)
 Reclassification on non-controlling                                        
  interests(h)                             (156,412)   (143,180)   (137,273)
---------------------------------------------------------------------------
Total liabilities per IFRS              $ 1,731,070  $1,663,689  $1,635,307
---------------------------------------------------------------------------
Total equity per Canadian GAAP          $ 1,276,628  $1,248,431  $1,236,086
 Leases(a)                                  (13,543)    (13,263)    (13,146)
 Employee benefits(b)                       (16,283)    (15,894)    (16,650)
 Site restoration costs(c)                   (4,113)     (3,638)     (3,612)
 Borrowing costs(d)                          14,370       9,464       4,961
 Uncertain tax positions(e)                  (7,158)     (5,431)     (5,365)
 Share-based payments(f)                     (5,738)     (3,784)       (261)
 Deferred tax impact and other                                              
  adjustments(g)                             10,549       8,694       8,863
 Reclassification on non-controlling                                        
  interests(h)                              156,412     143,180     137,272
 Other                                            -         889         126
---------------------------------------------------------------------------
Total equity per IFRS                   $ 1,411,124  $1,368,648  $1,348,274
---------------------------------------------------------------------------
Total liabilities and equity per IFRS   $ 3,142,194  $3,032,337  $2,983,581
---------------------------------------------------------------------------

Reconciliation of Net Income

The below table provides a summary of the adjustments to net income for the year ended December 31, 2010 and for the three months ended March 31, 2010:

                                                         Dec 31      Mar 31
                                                           2010        2010
---------------------------------------------------------------------------
Net income per Canadian GAAP                        $   101,733 $    29,320
 Leases(a)                                                 (398)       (117)
 Employee benefits(b)                                     1,402         755
 Site restoration costs(c)                                 (501)        (25)
 Uncertain tax positions(e)                              (1,793)        (66)
 Share based payments(f)                                 (4,588)     (3,416)
 Deferred tax impact and other adjustments(g)             1,791        (168)
 Other                                                     (126)        762
---------------------------------------------------------------------------
 Total adjustments                                       (4,213)     (2,275)
---------------------------------------------------------------------------
Net income per IFRS attributable to Methanex                                
 Corporation shareholders                           $    97,520  $   27,045
Net loss per IFRS attributable to non-controlling                           
 interests                                          $    (1,990) $     (825)
---------------------------------------------------------------------------
Total Net income                                    $    95,530  $   26,220
---------------------------------------------------------------------------
---------------------------------------------------------------------------

Reconciliation of Comprehensive Income

The below table provides a summary of the adjustments to comprehensive income for the year ended December 31, 2010 and for the three months ended March 31, 2010:

                                                         Dec 31      Mar 31
                                                           2010        2010
---------------------------------------------------------------------------
Comprehensive income per Canadian GAAP              $    86,140  $   25,269
 IFRS/CDN GAAP differences to net income (see table                         
  above)                                                 (4,213)     (2,275)
 Employee benefits - actuarial losses(b)                 (1,139)          -
 Borrowing costs transferred to property, plant and                         
  equipment(d)                                            9,409       4,503
---------------------------------------------------------------------------
Comprehensive income per IFRS attributable to                               
 Methanex Corporation shareholders                  $    90,197  $   27,497
Comprehensive loss per IFRS attributable to non-                            
 controlling interests                              $    (6,112) $     (692)
---------------------------------------------------------------------------
Total Comprehensive income                          $    84,085  $   26,805
---------------------------------------------------------------------------
---------------------------------------------------------------------------

The items noted above in the reconciliations of the statement of financial position, income and comprehensive income from Canadian GAAP to IFRS are described below:

a) 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. The Company has long-term oxygen supply contracts for its 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. The Company 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 $61.1 million and other long-term liabilities of $74.2 million with a corresponding decrease to retained earnings of $13.1 million.

In comparison to Canadian GAAP, for the three months ended March 31, 2010 and the year ended December 31, 2010 this accounting treatment resulted in lower cost of sales and operating costs, higher finance costs and higher depreciation and amortization charges, with no significant impact to net earnings. As at March 31, 2010 and December 31, 2010, this resulted in an increase to property, plant and equipment of $59.6 million and $55.1 million and other long-term liabilities of $72.9 million and $68.7 million with a corresponding decrease to shareholders' equity of $13.3 million and $13.5 million, respectively.

b) Employee benefits:

The Company elected the IFRS 1 exemption to recognize all cumulative actuarial gains and losses on defined benefit pension plans existing at the date of transition immediately in retained earnings. As at January 1, 2010 this results in a decrease to retained earnings of $16.7 million, a decrease to other assets of $10.6 million and an increase to other long-term liabilities of $6.0 million.

In comparison to Canadian GAAP for the three months ended March 31, 2010 and the year ended December 31, 2010, net earnings increased by approximately $0.8 and $1.4 million, respectively as a result of lower pension expense due to immediate recognition to retained earnings of these actuarial losses on transition to IFRS. Additionally, the Company's accounting policy under IFRS is to recognize all actuarial gains and losses in other comprehensive income and this resulted in an expense of $1.1 million for the year ended December 31, 2010. As at March 31, 2010 and December 31, 2010, the recognition of actuarial gains and losses into retained earnings resulted in a decrease to shareholders' equity of $15.9 million and 16.3 million, a decrease to other assets of $10.1 million and $10.6 million and increase to other long-term liabilities of $5.8 million and $5.7 million, respectively.

c) Site restoration costs:

Under IFRS, the Company recognizes a liability to dismantle and remove assets or to restore a site upon which the assets are located. The Company is required to determine a best estimate of site restoration costs for all sites whereas under Canadian GAAP site restoration costs 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. As at January 1, 2010, adjustments to the financial statements to recognize site restorations costs on transition to IFRS are recognized as an increase to other long-term liabilities of approximately $4.9 million and an increase to property, plant and equipment of approximately $1.3 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.

In comparison to Canadian GAAP at March 31, 2010 and December 31, 2010, recognition of site restoration costs resulted in an increase to other-long-term liabilities of approximately $4.9 million and $7.7 million and an increase to property, plant and equipment of approximately of $1.3 million and $3.6 million, with a corresponding decrease to shareholders' equity and no significant impact to net earnings, respectively.

d) Borrowing costs:

IAS 23 prescribes the accounting treatment and eligibility of borrowing costs. The Company has entered into interest rate swap contracts to hedge the variability in LIBOR-based interest payments on its Egypt limited recourse debt facilities. Under Canadian GAAP, cash settlements for these swaps during construction are recorded in accumulated other comprehensive income for the Company's 60% portion and 40% is recorded in non-controlling interest. Under IFRS, the cash settlements during construction are recorded to property, plant and equipment. Accordingly, there is an increase to property, plant and equipment of approximately $8.3 million, $15.8 million and $24.0 million as of January 1, 2010, March 31, 2010, and December 31, 2010, respectively. The increase to property, plant and equipment is offset by an increase to accumulated other comprehensive income of approximately $5.0 million, $9.5 million, and $14.4 million and an increase in non-controlling interest of approximately $3.3 million, $6.3 million, and $9.6 million as of January 1, 2010, March 31, 2010, and December 31, 2010, respectively, with no net impact on earnings.

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 $5.4 million in comparison to Canadian GAAP. For the three months ended March 31, 2010 and the year ended December 31, 2010, this has resulted in a decrease in net earnings of $0.1 million and $1.8 million with a corresponding increase to income tax liabilities.

f) Share-based payments:

During 2010, the Company made its first grant of SARs and TSARs in connection with the employee long-term incentive compensation plan.

Under Canadian GAAP, both SARs and TSARs are accounted for using the intrinsic value method. The intrinsic value related to SARs and TSARs 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 each period are recognized in earnings for the proportion of the service that has been rendered at each reporting date. Under IFRS, SARs and TSARs are required to be accounted for using a fair value method. The fair value related to SARs and TSARs is estimated using an option pricing model. Changes in fair value estimated using an option pricing model each period are recognized in earnings for the proportion of the service that has been rendered at each reporting date.

The fair value estimated using an option pricing model will be higher than the intrinsic value due to the time value included in the estimated fair value. Accordingly, it is expected that the difference between the accounting expense under IFRS compared with Canadian GAAP would be higher in the beginning life of a SAR or TSAR with this difference narrowing as time passes and with total accounting expense ultimately being the same on the date of exercise.

The SARs and TSARs were granted for the first time in March 2010, and therefore, there is no adjustment required to the financial statements on January 1, 2010. The difference in fair value method under IFRS compared with the intrinsic value method under Canadian GAAP, has resulted in the decrease to net earnings of approximately $3.4 million and $4.6 million, increase to other long-term liabilities of approximately $3.8 million and $5.7 million and corresponding decrease to shareholders' equity for the periods ended March 31, 2010 and December 31, 2010, respectively.

g) Deferred tax impact and other adjustments:

This adjustment primarily 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 $8.9 million. For the three months ended March 31, 2010 and the year ended December 31, 2010, this resulted in a decrease in net earnings of $0.2 million and an increase to net earnings of $1.8 million, respectively.

h) Reclassification of non-controlling interests from liabilities:

The Company has a 60% interest in EMethanex, the Egyptian company through which it has developed the Egyptian methanol project. The Company accounts for this investment using consolidation accounting which results in 100% of the assets and liabilities of EMethanex being included in the financial statements. The other investors' interest in the project is presented as "non-controlling interests". Under Canadian GAAP, the non-controlling interests is classified as a liability whereas under IFRS the non-controlling interests is classified as equity, but presented separately from the parent's shareholder equity. This reclassification results in a decrease to liabilities and an increase in equity of approximately $137.3 million, $143.2, and $156.4 million as of January 1, 2010, March 31, 2010, and December 31, 2010, respectively.

Methanex Corporation
Quarterly History (unaudited)
                           Q1 2011    2010(3)    Q4      Q3      Q2      Q1
---------------------------------------------------------------------------
METHANOL SALES VOLUMES          
(thousands of tonnes)        
Company produced               848     3,540    831     885     900     924
Purchased methanol             835     2,880    806     792     678     604
Commission sales(1)            172       509    151     101     107     150
---------------------------------------------------------------------------
                             1,855     6,929  1,788   1,778   1,685   1,678
---------------------------------------------------------------------------
METHANOL PRODUCTION                                 
(thousands of tonnes)                                                 
Chile                          183       935    208     194     229     304
Titan, Trinidad                121       891    233     217     224     217
Atlas, Trinidad (63.1%)        263       884    266     284      96     238
New Zealand                    203       830    206     200     216     208
Egypt (60%)                     31         -      -       -       -       -
---------------------------------------------------------------------------
                               801     3,540    913     895     765     967
---------------------------------------------------------------------------
AVERAGE REALIZED
 METHANOL PRICE(2)          
 ($/tonne)                     367       306    348     286     284     305
 ($/gallon)                   1.10      0.92   1.05    0.86    0.85    0.92
PER SHARE INFORMATION(4)
($ per share)              
 Basic net income (loss)   $  0.37      1.05   0.29    0.31    0.16    0.29
 Diluted net income (loss) $  0.37      1.05   0.29    0.31    0.16    0.29
---------------------------------------------------------------------------
                            2009(3)       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
Egypt (60%)                      -         -      -       -       -
-------------------------------------------------------------------
                             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(4)
 ($ 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.                                   
(3) The 2010 figures and related quarterly information are reported in
    accordance with IFRS as the company's date of transition from Canadian
    GAAP to IFRS was January 1, 2010. These figures have not been
    previously disclosed. The 2009 figures and related quarterly data are
    reported in accordance with Canadian GAAP, and have not been restated
    in accordance with IFRS. 
(4) Per share information calculated using net income attributable to
    Methanex shareholders                   

Jason Chesko
Methanex Corporation
604 661 2600

www.methanex.com

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