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Methanex Corporation (MX)
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Methanex Reports Second Quarter Results; Egypt and Medicine Hat Plants Driving Higher Production

Jul. 27, 2011 (Marketwire Canada) --

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

For the second quarter of 2011, Methanex reported Adjusted EBITDA(1) of $103.7 million and net income attributable to Methanex shareholders of $40.5 million ($0.43 per share on a diluted basis). This compares with Adjusted EBITDA(1) of $77.9 million and net income attributable to Methanex shareholders of $34.6 million ($0.37 per share on a diluted basis) for the first quarter of 2011.

Bruce Aitken, President and CEO of Methanex commented, "The Egypt and Medicine Hat plants have run very well since their start-up with the second quarter being our highest quarter of production since 2007. This led to higher earnings in the second quarter and these plants provide further upside for the remainder of 2011 when the full impact of their production will be reflected in our earnings."

Mr. Aitken added, "The methanol pricing environment has stayed firm supported by healthy global demand and the outlook is excellent with methanol demand growth expected to be strong and limited new capacity added to the industry over the next few years."

Mr. Aitken concluded, "We have a strong balance sheet with US$246 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. With the recent additions of Egypt and Medicine Hat over the past quarter we are well positioned to increase our earnings and cash flows and continue to deliver on our commitment to return excess cash to shareholders."

A conference call is scheduled for July 28, 2011 at 12:00 noon ET (9:00 am PT) to review these second quarter results. To access the call, dial the Conferencing operator ten minutes prior to the start of the call at (416) 340-8018, or toll free at (866) 223-7781. A playback version of the conference call will be available for three weeks at (905) 694-9451, 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 Second 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 Second Quarter 2011 Management's Discussion and Analysis for more information.

(1) Adjusted EBITDA is a non-IFRS measure which does not have any standardized meaning prescribed by IFRS. Adjusted EBITDA represents the amount that is attributable to Methanex shareholders and is calculated by deducting the amount of Adjusted EBITDA associated with the 40% non-controlling interest in the methanol facility in Egypt. Refer to Additional Information - Supplemental Non-IFRS Measures for a reconciliation to the most comparable IFRS measure.

Interim Report For the Three Months Ended June 30, 2011

At July 27, 2011 the company had 93,196,770 common shares issued and outstanding and stock options exercisable for 3,506,051 additional common shares.

Share Information

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


Transfer Agents & Registrars
CIBC Mellon Trust Company
320 Bay Street
Toronto, Ontario, Canada M5H 4A6
TOLL FREE IN NORTH AMERICA: 1-800-387-0825

Investor Information

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


Contact Information
Methanex Investor Relations
1800 - 200 Burrard Street
Vancouver, BC Canada V6C 3M1
E-mail: invest@methanex.com
Methanex Toll-Free:
1-800-661-8851

SECOND QUARTER MANAGEMENT'S DISCUSSION AND ANALYSIS

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

This Second Quarter 2011 Management's Discussion and Analysis ("MD&A") dated July 27, 2011 for Methanex Corporation ("the Company") should be read in conjunction with the Company's condensed consolidated interim financial statements for the periods ended June 30, 2011 and 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, for a discussion of the Company's adoption of IFRS.


                                       Three Months Ended Six Months Ended
                                  ----------------------- ----------------
                                   Jun 30  Mar 31  Jun 30   Jun 30 June 30
($ millions, except where noted)     2011    2011  2010(6)    2011  2010(6)
--------------------------------------------------------- ----------------

Production (thousands of tonnes)
 (attributable to Methanex
  shareholders)                     1,050     801     765    1,851   1,732

Sales volumes (thousands of
 tonnes):
  Produced methanol (attributable
   to Methanex shareholders)          970     848     900    1,818   1,824
  Purchased methanol                  664     835     678    1,499   1,282
  Commission sales (1)                231     172     107      403     257
--------------------------------------------------------------------------
  Total sales volumes               1,865   1,855   1,685    3,720   3,363
Methanex average non-discounted
 posted price ($ per tonne) (2)       421     436     330      428     341
Average realized price ($ per
 tonne) (3)                           363     367     284      365     294
Adjusted EBITDA (attributable
 to Methanex shareholders) (4)      103.7    77.9    61.9    181.6   143.2
Cash flows from operating
 activities                          77.6   124.5    39.4    202.2   108.5
Adjusted cash flows from operating
 activities (attributable to
 Methanex shareholders) (5)          86.5    80.4    53.0    166.9   144.6
Net income attributable to
 Methanex shareholders               40.5    34.6    14.8     75.1    41.8
Basic net income per common share
 attributable to Methanex
 shareholders                        0.44    0.37    0.16     0.81    0.45
Diluted net income per common
 share attributable to Methanex
 shareholders                        0.43    0.37    0.15     0.80    0.43
Common share information (millions
 of shares):
  Weighted average number of common
   shares                            93.0    92.7    92.2     92.7    92.2
  Diluted weighted average number
   of common shares                  94.6    94.3    93.3     94.3    93.4
  Number of common shares
   outstanding, end of period        93.2    92.7    92.2     93.2    92.2
--------------------------------------------------------------------------

(1) Commission sales represent volumes marketed on a commission basis
    related to the 36.9% of the Atlas methanol facility and 40% of the
    Egypt methanol facility that we do not own.

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

(3) Average realized price is calculated as revenue, excluding
    commissions earned and the Egypt non-controlling interest share of
    revenue, divided by the total sales volumes of produced and
    purchased methanol.

(4) Adjusted EBITDA is a non-IFRS measure which does not have any
    standardized meaning prescribed by IFRS. Adjusted EBITDA represents
    the amount that is attributable to Methanex shareholders and is
    calculated by deducting the amount of Adjusted EBITDA associated with
    the 40% non-controlling interest in the methanol facility in Egypt.
    Refer to Additional Information - Supplemental Non-IFRS Measures for
    a reconciliation to the most comparable IFRS measure.

(5) Adjusted cash flows from operating activities is a non-IFRS measure
    which does not have any standardized meaning prescribed by IFRS.
    Adjusted cash flows from operating activities is calculated by
    deducting changes in non-cash working capital and the amount of
    cash flows from operating activities associated with the 40%
    non-controlling interest in the methanol facility in Egypt. Refer to
    Additional Information - Supplemental Non-IFRS Measures for a
    reconciliation to the most comparable IFRS measure.

(6) These amounts have been restated in accordance with IFRS and have
    not been previously disclosed.


PRODUCTION SUMMARY

                                                         YTD Q2    YTD Q2
                          Q2 2011   Q1 2011    Q2 2010     2011      2010
(thousands of  Capacity    Produc-   Produc-   Produc-   Produc-   Produc-
 tonnes)             (1)     tion      tion      tion      tion      tion
-------------------------------------------------------------------------
Chile I, II,
 III and IV         950       142       183       229       325       533
Atlas
 (Trinidad)
 (63.1%
 interest)          288       263       263        96       526       334
Titan
 (Trinidad)         225       186       121       224       307       441
New Zealand
 (2)                213       207       203       216       410       424
Egypt (60%
 interest)          190       178        31         -       209         -
Medicine Hat        118        74         -         -        74         -
-------------------------------------------------------------------------
                  1,984     1,050       801       765     1,851     1,732
-------------------------------------------------------------------------

(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).

Chile

During the second quarter of 2011, we produced 142,000 tonnes in Chile operating one plant at approximately 50% 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.

Lower production at our Chile facilities during the second quarter of 2011 compared with the first quarter of 2011 was primarily due to lower natural gas deliveries from ENAP due to the need for ENAP to satisfy incremental demand for natural gas for residential purposes during the winter season in southern Chile. As we continue through the southern hemisphere winter months when residential energy demand is at its peak, there is pressure on short-term natural gas supply/demand fundamentals and increased risk that gas supply could fall below the level necessary to maintain the operation of one plant. Lower methanol production for the first six months of 2011 compared with the same period in 2010 is due primarily to lower gas production from ENAP.

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. Under the arrangement, we fund a 50% participation in the block and, as at June 30, 2011, we had contributed approximately $105 million. Over the past few years, we have also provided GeoPark with $57 million (of which approximately $40 million had been repaid at June 30, 2011) to support and accelerate GeoPark's natural gas exploration and development activities. GeoPark has agreed to supply us with all natural gas sourced from the Fell block under a ten-year exclusive supply arrangement that commenced in 2008. During the second quarter of 2011 approximately 85% 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. For two of the exploration blocks, we are participating in a consortium with other international oil and gas companies with GeoPark as the operator. We have approximately 15% participation in the consortium and at June 30, 2011, we had contributed $3 million for our share of the exploration costs.

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 a result, we are examining the viability of utilizing coal gasification as a feedstock and relocation of capacity to an alternative location.

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 that we will be able to maintain the operation of one plant or increase capacity utilization of our Chile assets and that either of these 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 cost-competitive annual capacity. During the second quarter of 2011 we produced 449,000 tonnes compared with 384,000 tonnes during the first quarter of 2011. Production at these facilities was higher by 65,000 tonnes during the second quarter of 2011 compared with the first quarter of 2011 due to unplanned maintenance activities at the Titan facility during the first quarter of 2011. Our Atlas facility experienced an unplanned shutdown in late July 2011 and we are currently assessing the timing of a major turnaround we had previously scheduled at this facility during the third quarter of 2011.

New Zealand

Our New Zealand facilities provide cost-competitive capacity and are underpinned by shorter term natural gas supply contracts. During the second quarter of 2011, we produced 207,000 tonnes compared with 203,000 tonnes during the first quarter of 2011. 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 commenced commercial operations in mid-March and has been operating well since that time. During the second quarter of 2011, the Egypt methanol facility produced 178,000 tonnes (60% interest). We have a 60% interest in the facility and have marketing rights for 100% of the production. This facility is ideally situated on the Mediteranean Sea to supply the European market and is underpinned by a 25-year take-or-pay natural gas purchase agreement where the gas price varies with methanol prices.

Medicine Hat

In late April 2011, we commenced production at our 470,000 tonne per year facility in Medicine Hat , Alberta and the facility produced 74,000 tonnes for the second quarter of 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 with the remainder of natural gas purchased on the spot market. We believe that the long term natural gas dynamics in North America will support the long term operation of this facility.

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.

We own 60% of the 1.26 million tonne per year Egypt methanol facility and we account for this investment using consolidation accounting, which results in 100% of the revenues and expenses being included in our financial statements with the other investors' interest in the methanol facility being presented as "non-controlling interests." For purposes of reviewing our operations, we analyze Adjusted EBITDA in the discussion below excluding the amounts associated with the other investors' 40% non-controlling interest.

For a further discussion of the definitions and calculations used in our Adjusted EBITDA analysis, refer to How We Analyze Our Business. Also, refer to the Supplemental Non-IFRS Measures section for a reconciliation of Adjusted EBITDA to the most comparable IFRS measure.

For the second quarter of 2011, we recorded Adjusted EBITDA of $103.7 million and net income attributable to Methanex Corporation shareholders of $40.5 million ($0.43 per share on a diluted basis). This compares with Adjusted EBITDA of $77.9 million and net income attributable to Methanex Corporation shareholders of $34.6 million ($0.37 per share on a diluted basis) and Adjusted EBITDA of $61.9 million and net income attributable to Methanex Corporation shareholders of $14.8 million ($0.15 per share on a diluted basis) for the first quarter of 2011 and second quarter of 2010, respectively.

For the six months ended June 30, 2011, we recorded Adjusted EBITDA of $181.6 million and net income attributable to Methanex Corporation shareholders of $75.1 million ($0.80 per share on a diluted basis). This compares with Adjusted EBITDA of $143.2 million and net income attributable to Methanex Corporation shareholders of $41.8 million ($0.43 per share on a diluted basis) during the same period in 2010.

Adjusted EBITDA (attributable to Methanex shareholders)

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


                               Q2 2011           Q2 2011       YTD Q2 2011
                         compared with     compared with     compared with
($ millions)                   Q1 2011           Q2 2010       YTD Q2 2010
--------------------------------------------------------------------------

Average realized price            $ (5)            $ 131             $ 238
Sales volume                        (4)                3                15
Total cash costs                    35               (92)             (215)
--------------------------------------------------------------------------
                                  $ 26              $ 42              $ 38
--------------------------------------------------------------------------


Average realized price

                                Three Months Ended     Six Months Ended
                      ---------------------------- --------------------
($ per tonne, except    Jun 30    Mar 31    Jun 30     Jun 30    Jun 30
 where noted)             2011      2011      2010       2011      2010
-------------------------------------------------- --------------------

Methanex average
 non-discounted
 posted price (1)          421       436       330        428       341
Methanex average
 realized price            363       367       284        365       294
Average discount           14%       16%       14%        15%       14%
-------------------------------------------------- --------------------

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

Over the first half of 2011, methanol demand has continued to be healthy with increases in demand driven by both traditional and energy derivatives. Industry supply and demand conditions have remained relatively balanced and as a result, the pricing environment has been stable (refer to Supply/Demand Fundamentals section for more information). Our average non-discounted posted price for the second quarter of 2011 was $421 per tonne compared with $436 per tonne for the first quarter of 2011 and $330 per tonne for the second quarter of 2010. Our average realized price for the second quarter of 2011 was $363 per tonne compared with $367 per tonne for the first quarter of 2011 and $284 per tonne for the second quarter of 2010. The change in our average realized price for the second quarter of 2011 decreased revenue by $5 million compared with the first quarter of 2011 and increased revenue by $131 million compared with the second quarter of 2010. Our average realized price for the six months ended June 30, 2011 was $365 per tonne compared with $294 per tonne for the same period in 2010 and this increased revenue by $238 million.

Sales volume

Total methanol sales volumes excluding commission sales volumes for the second quarter of 2011 were lower compared with the first quarter of 2011 by 49,000 tonnes and this resulted in lower Adjusted EBITDA by $4 million. The total methanol sales volumes excluding commission sales for the second quarter of 2011 and for the six month period ended June 30, 2011 were higher than comparable periods in 2010 by 56,000 tonnes and 211,000 tonnes, respectively. The higher sales volumes for the second quarter of 2011 and for the six month period ended June 30, 2011 compared with the comparable periods in 2010 resulted in higher Adjusted EBITDA by $3 million and $15 million, respectively. We have increased our sales volumes in 2011 compared with 2010 primarily to prepare for increased supply from the Egypt and Medicine Hat methanol facilities.

Total cash costs

The primary driver of changes in our total cash costs are changes in the cost of methanol we produce at our facilities and changes in the cost of methanol we purchase from others. 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:


                                Q2 2011        Q2 2011    YTD Q2 2011
                          compared with  compared with  compared with
($ millions)                    Q1 2011        Q2 2010    YTD Q2 2010
---------------------------------------------------------------------

Produced methanol costs,
 primarily natural gas              $ 7          $ (21)         $ (54)
Proportion of produced
 methanol sales                      23              4            (18)
Purchased methanol costs             (1)           (59)          (116)
Share-based compensation              9             (5)            (3)
Logistics costs                       -             (5)           (14)
Other, net                           (3)            (6)           (10)
---------------------------------------------------------------------
Change in Adjusted
 EBITDA                            $ 35          $ (92)        $ (215)
---------------------------------------------------------------------

Produced methanol costs, primarily natural gas

We purchase natural gas for the Chile, Trinidad, Egypt and New Zealand methanol facilities under natural gas purchase agreements where the terms include a base price and a variable price component linked to the price of methanol. For all periods presented, changes in natural gas costs associated with produced methanol were primarily due to the impact of changes in methanol prices and the timing of inventory flows.

Proportion of produced methanol sales

The cost of purchased methanol is generally higher than the cost of produced methanol. Accordingly, an increase in the proportion of produced methanol sales results in a decrease in our overall cost structure for a given period. The proportion of produced methanol sales for the second quarter of 2011 was higher compared to the first quarter of 2011 as a result of the production and sale of methanol from the methanol facilities in Egypt and Medicine Hat and this increased Adjusted EBITDA by $23 million. For the three and six-month periods ended June 30, 2011 compared with same periods in 2010, the impact of increased sales from the Egypt and Medicine Hat facilities was offset by lower sales from our Chile and Trinidad production facilities. Due to production ramp-up and the timing of inventory flows, sales of Egypt and Medicine Hat production in the second quarter of 2011 were less than half of the production capacity of those plants.

Purchased methanol costs

Purchased methanol costs during the second quarter of 2011 were similar to the first quarter of 2011. Purchase methanol costs were higher for the three and six-month periods ended June 30, 2011 compared with the same periods in 2010 primarily as a result of higher methanol pricing.

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, share-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 with the objective 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 was lower by $9 million in the second quarter of 2011 compared with the first quarter of 2011 primarily due to higher share-based compensation expense recorded in Q1 2011 related to the requirement under accounting rules for immediate recognition of share-based compensation issued to retirement eligible employees. Share-based compensation expense was higher in the three and six-month periods ended June 30, 2011 compared with the comparable periods in 2010, primarily as a result of changes in the share price.

Logistics costs

For the second quarter of 2011 compared with the first quarter of 2011, logistics costs were similar. For the second quarter of 2011 and the six month period ended June 30, 2011 compared with the comparable periods in 2010, logistics costs were higher by $5 million and $14 million, respectively, due primarily to higher bunker fuel costs.

Other, net

For the second quarter of 2011 and the six month period ended June 30, 2011 compared with the comparable periods in 2010, other costs were higher primarily as a result of higher costs due to lower production at our facilities in Chile and Trinidad and the impact of a weaker US dollar on the cost structure of our operations.

Depreciation and Amortization

Depreciation and amortization was $40 million for the second quarter of 2011 compared with $30 million for the first quarter of 2011 and $35 million for the second quarter of 2010. The increase in depreciation and amortization for the second quarter of 2011 compared with the first quarter 2011 is primarily a result of the commencement of depreciation associated with the methanol facilities in Egypt (100% basis) and Medicine Hat.

Depreciation and amortization was $69 million for the six month period ended June 30, 2011 compared with $71 million in the same period in 2010. The commencement of depreciation associated with the methanol facilities in Egypt (100% basis) and Medicine Hat was offset primarily by lower depreciation from our other methanol facilities as a result of lower sales volumes of product from these facilities related to the timing of inventory flows.

Finance Costs


                                   Three Months Ended     Six Months Ended
                         ---------------------------- --------------------
                           Jun 30    Mar 31    Jun 30     Jun 30    Jun 30
($ millions)                 2011      2011      2010       2011      2010
----------------------------------------------------- --------------------

Finance costs before
 capitalized interest        $ 17      $ 16      $ 17       $ 34      $ 34
Less capitalized interest       -        (7)       (9)        (7)      (18)
----------------------------------------------------- --------------------

Finance costs                $ 17       $ 9       $ 8       $ 27      $ 16
----------------------------------------------------- --------------------

Capitalized interest relates to interest costs capitalized during the construction of the 1.26 million tonne per year methanol facility in Egypt (100% basis). The Egypt methanol facility commenced production in mid-March 2011 and accordingly, we ceased capitalization of interest costs from this date.

Finance Income and Other Expenses


                                Three Months Ended     Six Months Ended
                    ------------------------------ --------------------
                        Jun 30    Mar 31    Jun 30     Jun 30    Jun 30
($ millions)              2011      2011      2010       2011      2010
-------------------------------------------------- --------------------


Finance income and
 other expenses            $ 1       $ 5       $ -        $ 6       $ 1
-------------------------------------------------- --------------------

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

Income Taxes

The effective tax rate for the second quarter of 2011 was approximately 25% compared with approximately 22% for the first quarter of 2011 and approximately 24% for the second quarter of 2010.

We earn the majority of our pre-tax earnings in Trinidad, Egypt, and Chile. In Chile and Trinidad, the statutory tax rate is 35%. In Egypt, the statutory tax rate has increased from 20% to 25% effective July 31, 2011.

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%. In the first half of 2011, demand has continued to be healthy and it is currently approximately 48 million tonnes on an annualized basis. Increases in demand have been primarily driven by both traditional and energy derivatives in Asia (particularly in China).

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. Many provinces in China have implemented fuel blending standards, and an M85 (or 85% methanol) national standard took effect December 1, 2009. We expect an M15 national standard could 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)

                      Jul       Jun       May       Apr
(US$ per tonne)      2011      2011      2011      2011
-------------------------------------------------------
United States         426       426       426       426
Europe (2)            418       438       434       438
Asia                  420       420       395       395
-------------------------------------------------------

(1) Discounts from our posted prices are offered to customers based on
    various factors.

(2) EUR295 for Q3 2011 (Q2 2011 - EUR305) converted to United States
    dollars.

During the second quarter of 2011, shipments commenced from our 60% owned 1.26 million tonne per year plant in Egypt and our 470,000 tonne per year plant in Medicine Hat. Demand growth has largely absorbed this new capacity. There are currently five large-scale methanol plants outside of China not in production and as a result, market conditions are tight and the pricing environment has strengthened. Our average non-discounted price for July 2011 is approximately $420 per tonne and we recently announced increases in our North America and Asia non-discounted prices for August to $459 per tonne and $470 per tonne, respectively.

Over the next few years, there is little new capacity expected to come on-stream outside China. There is a 0.85 million tonne plant expected to restart in Beaumont, Texas in 2012 and a 0.7 million tonne plant expected to start up in Azerbaijan in 2013. We expect that production from new capacity in China will be consumed in that country and that higher cost production capacity in China will need to operate in order to satisfy demand growth.

LIQUIDITY AND CAPITAL RESOURCES

Consolidated cash flows from operating activities in the second quarter of 2011 were $77.6 million compared with $124.5 million for the first quarter of 2011 and $39.4 million for the second quarter of 2010. The change in consolidated cash flows from operating activities in the second quarter of 2011 compared with the first quarter of 2011 and the second quarter of 2010 is primarily a result of changes in Adjusted EBITDA and changes in non-cash working capital.

Adjusted cash flows from operating activities, which excludes the amounts associated with the 40% non-controlling interests in the methanol facility in Egypt and changes in non-cash working capital, were $86.4 million in the second quarter of 2011 compared with $80.4 million for the first quarter of 2011 and $53.0 million for the second quarter of 2010. The change in Adjusted cash flows from operating activities in the second quarter of 2011 compared with the first quarter of 2011 and the second quarter of 2010 is primarily a result of changes in Adjusted EBITDA. Refer to the Supplemental Non-IFRS Measures section for a reconciliation of Adjusted cash flows from operating activities to the most comparable IFRS measure.

During the second quarter of 2011, the Board of Directors approved a 10 percent increase to our quarterly dividend to shareholders, from US$0.155 to US$0.17 per share, and we paid a quarterly dividend of $16 million.

During the second quarter of 2011, a debt principal payment of $8 million was paid on the Atlas limited recourse debt facilities.

The Egypt limited recourse debt facilities require that certain conditions associated with plant construction and commissioning be met by September 30, 2011 ("project completion"). These conditions include a 90 day plant reliability test, which was successfully completed during July 2011, and finalization of certain land title registrations and related mortgages which have not yet been completed that require action by Egyptian governmental entities. Project completion must be achieved in order for the Egypt entity to make distributions to shareholders and failure to reach project completion by September 30, 2011 would result in an event of default. We believe finalization of these items is not material to the plant operations. We are seeking a waiver from the lenders in the event these items are not finalized before September 30, 2011. We cannot provide assurance that the land title registrations and related mortgages will be finalized and project completion achieved by September 30, 2011 or that we would be able to obtain a waiver from the lenders.

At June 30, 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 and during the second quarter of 2011, we paid $12 million to support these initiatives. During the second quarter of 2011, GeoPark repaid $2 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 June 30, 2011 was $246 million. We have a strong balance sheet and an undrawn $200 million credit facility provided by highly rated financial institutions that was extended early in the third quarter of 2011 to mid-2015. 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 $70 million for the period to the end of 2012. During the second quarter of 2011, we completed commissioning our 470,000 tonne per year methanol plant in Medicine Hat, Alberta.

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

SHORT-TERM OUTLOOK

Into the third quarter of 2011, market conditions have tightened as a result of continued strong demand and planned and unplanned outages across the industry and methanol prices have increased.

We increased our production in the second quarter of 2011. The new 1.26 million tonne per year methanol facility in Egypt began operating in mid-March and produced at near full production rates in the second quarter of 2011. In April 2011, we completed commissioning our 470,000 tonne per year plant in Medicine Hat, Alberta and commenced production. Due to production ramp-up and the related timing of inventory flows, the full impact of Egypt and Medicine Hat production was not reflected in our second quarter results. We expect to increase our earnings capability as the full impact of Egypt and Medicine Hat production capacity is reflected in our sales volumes of produced product in the third quarter and beyond. This may be partially offset in the short-term by the impact of lower production from the Atlas facility.

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 June 30, 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 first quarter of 2011 ended March 31, 2011 with comparative financial results for 2010 was our first interim period reported under IFRS. All comparative figures in this second quarter interim report 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 included in the interim report for the three months ended March 31, 2011.

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 12 of the condensed consolidated interim financial statements for the reconciliations between IFRS and Canadian GAAP for the period ended June 30, 2010 and refer to note 18 of the condensed consolidated interim financial statements for the period ended March 31, 2011 for the reconciliations between IFRS and Canadian GAAP at the date of transition, January 1, 2010 and for the year ended December 31, 2010.

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 elected 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 12 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 Arrangement Accounting

In May 2011, the IASB issued new accounting standards related to consolidation and joint arrangement accounting. The IASB has revised the definition of "control," which is a criterion for consolidation accounting. In addition, changes to IFRS in the accounting for joint arrangements were issued which, under certain circumstances, removed the option for proportionate accounting and the equity method of accounting for such interests would need to be applied. The impact of applying consolidation accounting or equity accounting does not result in any change to net earnings or shareholders' equity, but would result in a significant presentation impact. We are currently assessing the impact of these standards on our financial statements. The effective date for these standards is for periods commencing on or after January 1, 2013, with earlier adoption permitted.

Leases

As part of their global conversion project, the International Accounting Standards Board (IASB) and the U.S. Financial Accounting Standards Board ("FASB") issued 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 2012.

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 and Adjusted cash flows from operating activities. 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. These supplemental non-IFRS measures are provided to assist readers in determining our ability to generate cash from operations. We believe these measures are useful in assessing operating performance and liquidity of the Company's ongoing business 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.

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 (attributable to Methanex shareholders)

Adjusted EBITDA differs from the most comparable IFRS measure, cash flows from operating activities, 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, finance income and other expenses, and Adjusted EBITDA associated with the 40% non-controlling interest in the methanol facility in Egypt.

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


                                   Three Months Ended     Six Months Ended
                        ----------------------------- --------------------
                          Jun 30    Mar 31     Jun 30     Jun 30    Jun 30
($ thousands)               2011      2011       2010       2011      2010
----------------------------------------------------- --------------------

Cash flows from
 operating
 activities             $ 77,634 $ 124,520   $ 39,445  $ 202,154 $ 108,466
Add (deduct):
Net (income) loss
 attributable to
 non-controlling
 interests                (6,220)    1,076        565     (5,144)    1,390
 Changes in non-cash
  working capital         22,227   (44,486)    13,459    (22,259)   35,636
Other cash payments,
 including
 share-based
 compensation              1,662     5,334        960      6,996     4,122
 Share-based
  compensation
  expense                 (1,660)  (10,080)     4,297    (11,740)   (9,099)
 Other non-cash items     (1,392)      (31)      (766)    (1,423)   (1,308)
 Income taxes paid        20,735     6,669      4,441     27,404     6,211
 Finance income and
  other expenses          (1,284)   (4,859)       (79)    (6,143)   (1,339)
 Non-controlling
  interests
  adjustment(1)           (8,038)     (211)      (454)    (8,249)     (893)
------------------------------------------------------ -------------------
Adjusted EBITDA
 (attributable to
 Methanex
 shareholders)         $ 103,664  $ 77,932   $ 61,868  $ 181,596 $ 143,186
------------------------------------------------------ -------------------

(1) This adjustment represents finance costs, income tax expense, and
    depreciation and amortization associated with the 40% non-controlling
    interest in the methanol facility in Egypt.

Adjusted Cash Flows from Operating Activities (attributable to Methanex shareholders)

Adjusted cash flows from operating activities differs from the most comparable IFRS measure, cash flows from operating activities, because it does not include changes in non-cash working capital and cash flows associated with the 40% non-controlling interest in the methanol facility in Egypt.

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


                                   Three Months Ended     Six Months Ended
                        ----------------------------- --------------------
                           Jun 30    Mar 31    Jun 30     Jun 30    Jun 30
($ thousands)                2011      2011      2010       2011      2010
----------------------------------------------------- --------------------

Cash flows from
 operating
 activities              $ 77,634 $ 124,520  $ 39,445  $ 202,154 $ 108,466
Add (deduct)
 non-controlling
 interests adjustment:
 Net (income) loss         (6,220)    1,076       565     (5,144)    1,390
 Non-cash items            (7,180)     (715)     (483)    (7,894)     (885)
Changes in non-cash
 working capital           22,227   (44,486)   13,459    (22,259)   35,636
----------------------------------------------------- --------------------
Adjusted cash flows from
 operating activities
 (attributable to
 Methanex
 shareholders)           $ 86,461  $ 80,395  $ 52,986  $ 166,857 $ 144,607
----------------------------------------------------- --------------------

QUARTERLY FINANCIAL DATA (UNAUDITED)

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


                                        Three Months Ended
                         ------------------------------------------------
($ thousands, except per       Jun 30      Mar 31      Dec 31      Sep 30
 share amounts)                  2011        2011     2010 (1)    2010 (1)
-------------------------------------------------------------------------

Revenue                     $ 622,829   $ 619,007   $ 570,337   $ 480,997
Net income(2)                  40,529      34,610      27,009      28,662
Net income before unusual
 item(2)                       40,529      34,610      27,009       6,439
Basic net income per
 common share(2)                 0.44        0.37        0.29        0.31
Basic net income per
 common share before
 unusual item(2)                 0.44        0.37        0.29        0.07
Diluted net income per
 common share(2)                 0.43        0.37        0.29        0.31
Diluted net income per
 common share before
 unusual item(2)                 0.43        0.37        0.29        0.07
-------------------------------------------------------------------------

                                        Three Months Ended
                         ------------------------------------------------
($ thousands, except per       Jun 30      Mar 31      Dec 31      Sep 30
 share amounts)               2010 (1)    2010 (1)    2009 (3)    2009 (3)
-------------------------------------------------------------------------

Revenue                     $ 448,543   $ 466,706   $ 381,729   $ 316,932
Net income (loss)(2)           14,804      27,045      25,718        (831)
Net income (loss) before
 unusual item(2)               14,804      27,045      25,718        (831)
Basic net income (loss)
 per common share(2)             0.16        0.29        0.28       (0.01)
Basic net income (loss)
 per common share before
 unusual item(2)                 0.16        0.29        0.28       (0.01)
Diluted net income (loss)
 per common share(2)             0.15        0.29        0.28       (0.01)
Diluted net income (loss)
 per common share before
 unusual item(2)                 0.15        0.29        0.28       (0.01)
-------------------------------------------------------------------------

(1) These amounts have been restated in accordance with IFRS.
(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 Second Quarter 2011 Management's Discussion and Analysis ("MD&A") as well as comments made during the Second Quarter 2011 investor conference call contain forward-looking statements with respect to us and our industry. Statements that include the words "believes," "expects," "may," "will," "should," "intends," "plans," "estimates," "anticipates," 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 restarted Medicine Hat facility,
-- 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,
-- ability to meet covenants or obtain waivers associated with our long-term
   debt obligations, including without limitation, the Egypt limited
   recourse debt facilities which have conditions associated with
   finalization of certain land title registration 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,
   capacity expansions, or plant relocations,
-- 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 restarted
   Medicine Hat facility,
-- 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,
-- 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 ability to successfully carry out corporate initiatives and
   strategies,
-- actions of competitors, suppliers, and financial institutions,
-- 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 Second 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 expenses, 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, excluding commission sales volumes. The key drivers of change in our Adjusted EBITDA are average realized price, cash costs and sales volume which 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 income.

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. 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 own 63.1% of the Atlas methanol facility and market the remaining 36.9% through a commission offtake agreement. We account for this investment using proportionate consolidation which results in 63.1% of the revenues and expenses being included in our financial statements with the remaining 36.9% portion included as commission income.

We own 60% of the 1.26 million tonne per year Egypt methanol facility and market the remaining 40% through a commission offtake agreement. We account for this investment using consolidation accounting, which results in 100% of the revenues and expenses being included in our financial statements with the other investors' interest in the methanol facility being presented as "non-controlling interests". For purposes of analyzing our results, we analyze Adjusted EBITDA and Adjusted cash flows from operating activities excluding the amounts associated with the other investors' 40% non-controlling interest and include these results in commission income on a consistent basis with how we present the Atlas facility.


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

                               Three Months Ended        Six Months Ended
                         ------------------------ -----------------------
                               Jun 30      Jun 30      Jun 30      Jun 30
                                 2011        2010        2011        2010
-------------------------------------------------------------------------

Revenue                   $   622,829 $   448,543 $ 1,241,836 $   915,249
Cost of sales and
 operating expenses
 (note 6)                     504,907     386,786   1,046,847     772,560
Depreciation and
 amortization (note 6)         39,713      35,444      69,413      70,529
-------------------------------------------------------------------------
Operating income               78,209      26,313     125,576      72,160
Finance costs (note 7)        (17,350)     (7,564)    (26,543)    (15,616)
Finance income and other
 expenses                       1,284          79       6,143       1,339
-------------------------------------------------------------------------
Profit before income tax
 expense                       62,143      18,828     105,176      57,883
Income tax expense:
 Current                       (8,267)     (5,349)    (16,542)    (12,408)
 Deferred                      (7,127)        760      (8,351)     (5,016)
-------------------------------------------------------------------------
                              (15,394)     (4,589)    (24,893)    (17,424)
-------------------------------------------------------------------------
Net income                $    46,749 $    14,239 $    80,283 $    40,459
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Attributable to:
 Methanex Corporation
  shareholders                 40,529      14,804      75,139      41,849
 Non-controlling
  interests                     6,220        (565)      5,144      (1,390)
-------------------------------------------------------------------------
                          $    46,749 $    14,239 $    80,283 $    40,459
-------------------------------------------------------------------------
-------------------------------------------------------------------------

Income for the period
 attributable to Methanex
 Corporation shareholders
 Basic net income per
  common share            $      0.44 $      0.16 $      0.81 $      0.45
 Diluted net income per
  common share            $      0.43 $      0.15 $      0.80 $      0.43

Weighted average number
 of common shares
 outstanding               92,972,678  92,185,997  92,711,291  92,157,320
Diluted weighted average
 number of common shares
 outstanding               94,580,090  93,337,075  94,288,918  93,383,467

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        Six Months Ended
                          ------------------------ -----------------------
                                Jun 30      Jun 30      Jun 30      Jun 30
                                  2011        2010        2011        2010
--------------------------------------------------------------------------

Net income                 $    46,749 $    14,239 $    80,283 $    40,459
 Other comprehensive
  income (loss):
  Change in fair value of
   forward exchange               (669)       (253)       (669)          -
   contracts, net of tax
  Change in fair value of
   interest rate swap           (7,905)    (11,597)     (7,710)    (18,770)
   contracts, net of tax
  Interest rate swap cash
   settlement reclassified           -           -         870           -
   to interest expense
  Interest rate swap cash
   settlement reclassified
   to property, plant and            -           -       7,279       7,505
   equipment
--------------------------------------------------------------------------
                                (8,574)    (11,850)       (230)    (11,265)
--------------------------------------------------------------------------
Comprehensive income       $    38,175 $     2,389 $    80,053 $    29,194
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Attributable to:
  Methanex Corporation
   shareholders                 35,117       7,592      74,733      35,089
  Non-controlling
   interests                     3,058     (5,203)       5,320     (5,895)
--------------------------------------------------------------------------
                           $    38,175 $     2,389 $    80,053 $    29,194
--------------------------------------------------------------------------
--------------------------------------------------------------------------

See accompanying notes to condensed consolidated interim financial
statements.


Methanex Corporation
Consolidated Statements of Financial Position (unaudited)
(thousands of U.S. dollars)

                                                      Jun 30        Dec 31
                                                        2011          2010
--------------------------------------------------------------------------

ASSETS
Current assets:
 Cash and cash equivalents                     $     245,624 $     193,794
 Trade and other receivables                         351,444       320,027
 Inventories                                         236,750       229,657
 Prepaid expenses                                     31,280        26,877
--------------------------------------------------------------------------
                                                     865,098       770,355
Non-current assets:
 Property, plant and equipment (note 3)            2,270,706     2,258,576
 Other assets                                        115,686       113,263
--------------------------------------------------------------------------
                                                   2,386,392     2,371,839
--------------------------------------------------------------------------
                                               $   3,251,490 $   3,142,194
--------------------------------------------------------------------------
--------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Trade, other payables and accrued liabilities $     309,962 $     259,039
 Current maturities on long-term debt (note 5)        50,099        49,965
 Current maturities on finance leases                  6,264        11,570
 Current maturities on other long-term
  liabilities                                         19,620         9,677
--------------------------------------------------------------------------
                                                     385,945       330,251
Non-current liabilities:
 Long-term debt (note 5)                             876,359       896,976
 Finance leases                                       59,548        67,842
 Other long-term liabilities                         136,287       140,570
 Deferred income tax liabilities                     303,782       295,431
--------------------------------------------------------------------------
                                                   1,375,976     1,400,819
Equity:
 Capital stock                                       453,840       440,092
 Contributed surplus                                  22,297        25,393
 Retained earnings                                   860,249       815,320
 Accumulated other comprehensive loss                (26,499)      (26,093)
--------------------------------------------------------------------------
 Shareholders' equity                              1,309,887     1,254,712
 Non-controlling interests                           179,682       156,412
--------------------------------------------------------------------------
 Total equity                                      1,489,569     1,411,124
--------------------------------------------------------------------------
                                               $   3,251,490 $   3,142,194
--------------------------------------------------------------------------
--------------------------------------------------------------------------

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)

                                                                    Accumu-
                                                                     lated
                         Number                                      Other
                             of               Contri-               Compre-
                         Common    Capital     buted   Retained    hensive
                         Shares      Stock   Surplus   Earnings       Loss

Balance, January 1,
 2010                92,108,242  $ 427,792  $ 26,981  $ 776,139 $  (19,910)
 Net income (loss)            -          -         -     41,849          -
 Other comprehensive
  loss                        -          -         -          -     (6,760)
 Compensation
  expense recorded
  for stock options           -          -       875          -          -
 Issue of shares on
  exercise of
  stock options          88,490        897         -          -          -
 Reclassification of
  grant date
  fair value on
  exercise of
  stock options               -        326      (326)         -          -
 Dividend payments
  to Methanex
  Corporation
  shareholders                -          -         -    (28,575)         -
 Dividend payments
  to non-controlling
  interests                   -          -         -          -          -
 Capital
  contributions by
  non-controlling
  interests                   -          -         -          -          -
--------------------------------------------------------------------------
Balance, June 30,
 2010                92,196,732    429,015    27,530    789,413    (26,670)
 Net income (loss)            -          -         -     55,671          -
 Other comprehensive
  income (loss)               -          -         -     (1,139)       577
 Compensation
  expense recorded
  for stock options           -          -       600          -          -
 Issue of shares on
  exercise of
  stock options         435,290      8,340         -          -          -
 Reclassification of
  grant date
  fair value on
  exercise of
  stock options               -      2,737    (2,737)         -          -
 Dividend payments
  to Methanex
  Corporation
  shareholders                -          -         -    (28,625)         -
 Dividend payments
  to non-controlling
  interests                   -          -         -          -          -
 Capital
  contributions
  non-controlling
  interests                   -          -         -          -          -
--------------------------------------------------------------------------
Balance, December
 31, 2010            92,632,022    440,092    25,393    815,320    (26,093)
  Net income                  -          -         -     75,139          -
  Other
   comprehensive
   income (loss)              -          -         -          -       (406)
  Compensation
   expense recorded
   for stock options          -          -       472          -          -
  Issue of shares on
   exercise of stock
   options              534,318     10,180          -         -          -
  Reclassification
   of grant date
   fair value on
   exercise of
   stock options              -      3,568     (3,568)        -          -
  Dividend payments
   to Methanex
    Corporation
    shareholders              -          -         -     (30,210)        -
  Dividend payments
   to non-controlling
   interests                  -          -         -          -          -
  Capital
   contributions
   non-controlling
   interests                  -          -         -          -          -
--------------------------------------------------------------------------
Balance, June 30,
 2011                93,166,340  $ 453,840  $ 22,297  $ 860,249 $  (26,499)
--------------------------------------------------------------------------
--------------------------------------------------------------------------

                                                            Non-
                                               Share-  Controll-
                                             holders'       ing      Total
                                              Equity  Interests     Equity



Balance, January 1, 2010                 $ 1,211,002  $ 137,272 $1,348,274
 Net income (loss)                            41,849     (1,390)    40,459

 Other comprehensive loss                     (6,760)    (4,505)   (11,265)
 Compensation expense recorded
  for stock options                              875          -        875
 Issue of shares on exercise of
  stock options                                  897          -        897
 Reclassification of grant date
  fair value on exercise of
  stock options                                    -          -          -
 Dividend payments to Methanex
  Corporation shareholders                   (28,575)         -    (28,575)
 Dividend payments to
  non-controlling interests                        -       (750)      (750)
 Capital contributions by                                                -
  non-controlling interests                        -     12,400     12,400
--------------------------------------------------------------------------
Balance, June 30, 2010                     1,219,288    143,027  1,362,315
 Net income (loss)                            55,671       (600)    55,071

 Other comprehensive income (loss)              (562)       385       (177)
 Compensation expense recorded
  for stock options                              600          -        600
 Issue of shares on exercise of
  stock options                                8,340          -      8,340
 Reclassification of grant date
  fair value on exercise of
  stock options                                    -          -          -
 Dividend payments to Methanex
  Corporation shareholders                   (28,625)         -    (28,625)
 Dividend payments to
  non-controlling interests                        -          -          -
 Capital contributions
  non-controlling interests                        -     13,600     13,600
--------------------------------------------------------------------------
Balance, December 31, 2010                 1,254,712    156,412  1,411,124
 Net income                                   75,139      5,144     80,283

 Other comprehensive income (loss)              (406)       176       (230)
 Compensation expense recorded
  for stock options                              472          -        472
 Issue of shares on exercise of
  stock options                               10,180          -     10,180
 Reclassification of grant date
  fair value on exercise of
  stock options                                    -          -          -
 Dividend payments to Methanex
  Corporation shareholders                   (30,210)         -    (30,210)
 Dividend payments to
  non-controlling interests                        -     (1,250)    (1,250)
 Capital contributions
  non-controlling interests                        -     19,200     19,200
--------------------------------------------------------------------------
Balance, June 30, 2011                   $ 1,309,887  $ 179,682 $1,489,569
--------------------------------------------------------------------------
--------------------------------------------------------------------------

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        Six Months Ended
                          ------------------------ -----------------------
                                Jun 30      Jun 30      Jun 30      Jun 30
                                  2011        2010        2011        2010
--------------------------------------------------------------------------

CASH FLOWS FROM OPERATING
 ACTIVITIES
 Net income                $    46,749 $    14,239 $    80,283 $    40,459
 Add (deduct) non-cash
  items:
  Depreciation and
   amortization                 39,713      35,444      69,413      70,529
  Income tax expense            15,394       4,589      24,893      17,424
  Share based compensation       1,660      (4,297)     11,740       9,099
  Finance costs                 17,350       7,564      26,543      15,616
  Other                          1,392         766       1,423       1,308
 Income taxes paid             (20,735)     (4,441)    (27,404)     (6,211)
 Other cash payments,
  including share-based         (1,662)       (960)     (6,996)     (4,122)
  compensation
--------------------------------------------------------------------------
 Cash flows from operating
  activities before             99,861      52,904     179,895     144,102
  undernoted
 Changes in non-cash
  working capital (note        (22,227)    (13,459)     22,259     (35,636)
  10)
--------------------------------------------------------------------------
                                77,634      39,445     202,154     108,466
--------------------------------------------------------------------------

CASH FLOWS FROM FINANCING
 ACTIVITIES
 Dividend payments             (15,839)    (14,290)    (30,210)    (28,575)
 Interest paid, including
  interest rate swap            (4,851)     (6,176)    (30,251)    (30,896)
  settlements
 Repayment of limited
  recourse debt                 (8,641)     (7,328)    (24,840)     (7,641)
 Equity contributions by
  non-controlling                3,600       5,800      19,200      12,400
  interests
 Dividend payments to non-
  controlling interests         (1,250)       (750)     (1,250)       (750)
 Proceeds from limited
  recourse debt                  2,700       5,500       2,700      37,100
 Proceeds on issue of
  shares on exercise of          8,524         218      10,180         897
  stock options
 Repayment of finance
  leases, including other       (1,514)     (2,915)     (2,845)     (5,826)
  long term liabilities
--------------------------------------------------------------------------
                               (17,271)    (19,941)    (57,316)    (23,291)
--------------------------------------------------------------------------

CASH FLOWS FROM INVESTING
 ACTIVITIES
 Property, plant and
  equipment                    (39,322)    (27,142)    (78,782)    (58,333)
 Oil and gas assets            (11,897)     (5,810)    (17,497)    (15,136)
 GeoPark repayments              2,454       2,052       7,551       4,981
 Project financing reserve
  accounts                      (2,209)          -      (2,209)          -
 Other assets                        -      (9,498)          -      (9,498)
 Changes in non-cash
  working capital related
  to investing activities       (3,570)      2,506      (2,071)        938
  (note 10)
--------------------------------------------------------------------------
                               (54,544)    (37,892)    (93,008)    (77,048)
--------------------------------------------------------------------------
 Increase (decrease) in
  cash and cash                  5,819     (18,388)     51,830       8,127
  equivalents
 Cash and cash
  equivalents, beginning       239,805     196,303     193,794     169,788
  of period
--------------------------------------------------------------------------
 Cash and cash
  equivalents, end of      $   245,624 $   177,915 $   245,624 $   177,915
  period
--------------------------------------------------------------------------
--------------------------------------------------------------------------

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. Basis of Presentation:

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) on a basis consistent with the significant accounting policies disclosed in note 2 of the most recent interim financial statements and therefore should be read in conjunction with the condensed consolidated interim financial statements for the period ended March 31, 2011. These condensed consolidated interim financial statements are part of the period covered by the Company's first International Financial Reporting Standards (IFRS) consolidated financial statements for the year ending December 31, 2011 and therefore IFRS 1, First Time Adoption of IFRS has been applied. 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 July 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. The period ended March 31, 2011, with comparative results for 2010, was the Company's first IFRS condensed consolidated interim financial statements. 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 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 for the period ended June 30, 2010 is provided in note 12. This note includes information on the provisions of IFRS 1 and the exemptions that the Company elected to apply at the date of transition, January 1, 2010, and reconciliations of equity, net income and comprehensive income for the comparative periods ended June 30, 2010. For a summary of the impact of transition from Canadian GAAP to IFRS at the date of transition, January 1, 2010, as well as for the year ended December 31, 2010, refer to note 18 of the condensed consolidated interim financial statements for the first quarter of 2011 ended March 31, 2011.

These condensed consolidated interim financial statements include the Egypt methanol facility on a consolidated basis, with the other investors' 40% share presented as non-controlling interest and our proportionate share of the Atlas methanol facility.

2. Inventories:

Inventories are valued at the lower of cost, determined on a first-in first-out basis, and estimated net realizable value. The amount of inventories included in cost of sales and operating expenses and depreciation and amortization for the three and six month periods ended June 30, 2011 is $490 million (2010 - $380 million) and $997 million (2010 - $742 million), respectively.


3. Property, plant and equipment:

                          Buildings,
                              Plant
                    Installations &      Oil & Gas
                          Machinery     Properties       Other       Total
--------------------------------------------------------------------------

Cost at June 30,
 2011                   $ 3,184,346       $ 58,905    $ 82,595 $ 3,325,846
Accumulated
 depreciation at
 June 30, 2011              991,138         25,290      38,712   1,055,140
--------------------------------------------------------------------------
Net book value at
 June 30, 2011          $ 2,193,208       $ 33,615    $ 43,883 $ 2,270,706
--------------------------------------------------------------------------

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
--------------------------------------------------------------------------

4. Interest in Atlas joint venture:

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


                                                        Jun 30      Dec 31
Consolidated Statements of Financial Position             2011        2010
--------------------------------------------------------------------------

Cash and cash equivalents                             $ 25,953    $ 10,676
Other current assets                                    83,068      83,795
Property, plant and equipment                          277,929     276,114
Other assets                                            14,757      12,548
Trade, other payables and accrued liabilities           33,171      23,934
Long-term debt, including current maturities (note
 5)                                                     71,743      79,577
Finance leases and other long-term liabilities,
 including current maturities                           50,731      52,480
Deferred income tax liabilities                         19,769      18,893
--------------------------------------------------------------------------



                               Three Months Ended         Six Months Ended
                         ------------------------ ------------------------
Consolidated Statements        Jun 30      Jun 30       Jun 30      Jun 30
 of Income (Loss)                2011        2010         2011        2010
------------------------------------------------- ------------------------

Revenue                      $ 63,177    $ 42,266    $ 134,755    $ 95,102
Expenses                      (53,291)    (41,667)    (113,179)    (88,844)
------------------------------------------------- ------------------------
Income before income
 taxes                          9,886         599       21,576       6,258
Income tax expense             (1,759)       (673)      (3,532)     (1,825)
------------------------------------------------- ------------------------
Net income                    $ 8,127       $ (74)    $ 18,044     $ 4,433
------------------------------------------------- ------------------------

                               Three Months Ended         Six Months Ended
                         ------------------------ ------------------------
Consolidated Statements        Jun 30      Jun 30       Jun 30      Jun 30
 of Cash Flows                   2011        2010         2011        2010
------------------------------------------------- ------------------------

Cash flows from operating
 activities                  $ 24,530    $ 17,225     $ 32,565    $ 30,612
Cash outflows from
 financing activities          (9,861)     (8,840)     (11,523)    (10,650)
Cash outflows from
 investing activities          (4,397)     (1,104)      (5,765)     (1,620)
------------------------------------------------- ------------------------

5. Long-term debt:
                                                 Jun 30         Dec 31
                                                   2011           2010
----------------------------------------------------------------------

Unsecured notes
 8.75% due August 15, 2012                    $ 199,372      $ 199,112
 6.00% due August 15, 2015                      149,011        148,908
----------------------------------------------------------------------
                                                348,383        348,020
Atlas limited recourse debt facilities           71,743         79,577
Egypt limited recourse debt facilities          485,219        499,706
Other limited recourse debt facilities           21,113         19,638
----------------------------------------------------------------------
                                                926,458        946,941
Less current maturities                         (50,099)       (49,965)
----------------------------------------------------------------------
                                              $ 876,359      $ 896,976
----------------------------------------------------------------------

During the three and six month periods ended June 30, 2011, the Company made repayments on its Atlas limited recourse debt facilities of $8.0 million, and other limited recourse debt facilities of $0.6 million and $1.2 million, respectively. The Company also made repayments on its Egypt limited recourse debt facilities of $15.6 million during the six month period ended June 30, 2011.

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 and this was extended in early July 2011 to May 2015. This facility 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 require that certain conditions associated with plant construction and commissioning be met by September 30, 2011 ("project completion"). These conditions include a 90 day plant reliability test, which was successfully completed during July 2011, and finalization of certain land title registrations and related mortgages which have not yet been completed that require action by Egyptian governmental entities. Project completion must be achieved in order for the Egypt entity to make distributions to shareholders and failure to reach project completion by September 30, 2011 would result in an event of default. We believe finalization of these items is not material to the plant operations. We are seeking a waiver from the lenders in the event these items are not finalized before September 30, 2011. We cannot provide assurance that the land title registrations and related mortgages will be finalized and project completion achieved by September 30, 2011 or that we would be able to obtain a waiver from the lenders.

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 principle and accrued interest.

At June 30, 2011, management believes the Company was in compliance with all of the covenants and default provisions referred to above.


6. Expenses by function:

                               Three Months Ended         Six Months Ended
                         ------------------------ ------------------------
                               Jun 30      Jun 30       Jun 30      Jun 30
                                 2011        2010         2011        2010
------------------------------------------------- ------------------------

Cost of sales               $ 456,731   $ 353,170    $ 936,752   $ 690,836
Selling and distribution       78,811      64,251      153,847     130,834
Administrative expenses         9,078       4,809       25,661      21,419
------------------------------------------------- ------------------------
Total expenses by
 function                   $ 544,620   $ 422,230  $ 1,116,260   $ 843,089
------------------------------------------------- ------------------------

Cost of sales and
 operating expenses           504,907     386,786    1,046,847     772,560
Depreciation and
 amortization                  39,713      35,444       69,413      70,529
------------------------------------------------- ------------------------

Total expenses per
 Consolidated Statements
 of Income                  $ 544,620   $ 422,230  $ 1,116,260   $ 843,089
------------------------------------------------- ------------------------

Included in total expenses for the three and six month periods ended June 30, 2011 are employee expenses of $31.4 million (2010 - $23.0 million) and $74.4 million (2010 - $62.2 million), respectively.


7. Finance costs:

                               Three Months Ended         Six Months Ended
                         ------------------------ ------------------------
                               Jun 30      Jun 30       Jun 30      Jun 30
                                 2011        2010         2011        2010
------------------------------------------------- ------------------------

Finance costs                $ 17,350    $ 17,056     $ 33,773    $ 34,215
Less: capitalized
 interest related to
 Egypt plant under
 construction                       -      (9,492)      (7,230)    (18,599)
------------------------------------------------- ------------------------

                             $ 17,350     $ 7,564     $ 26,543    $ 15,616
------------------------------------------------- ------------------------

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 completed and ready for productive use in mid-March of 2011. The Company has interest rate swap contracts on its Egypt limited recourse debt facilities 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 and six month periods ended June 30, 2011 interest costs of nil (2010 - $9.5 million) and $7.2 million (2010 - $18.6 million), respectively, related to this project were capitalized.

8. Net income per common share:

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


                               Three Months Ended         Six Months Ended
                         ------------------------ ------------------------
                               Jun 30      Jun 30       Jun 30      Jun 30
                                 2011        2010         2011        2010
------------------------------------------------- ------------------------

Denominator for basic net
 income per common share   92,972,678  92,185,997   92,711,291  92,157,320
Effect of dilutive stock
 options                    1,607,412   1,151,078    1,577,627   1,226,147
------------------------------------------------- ------------------------

Denominator for diluted
 net income per common
 share (1)                 94,580,090  93,337,075   94,288,918  93,383,467
------------------------------------------------- ------------------------

(1) All outstanding options are dilutive and have been included in the
    diluted weighted average number of common shares calculation for the
    three month and six month periods ended June 30, 2011. Outstanding
    tandem share appreciation rights (TSARs) may be settled in cash or
    common shares at the holder's option and for purposes of calculating
    diluted net income per common share, the more dilutive of cash-settled
    and equity-settled is used. For 2010, TSARs that are accounted for as
    liability-based awards for accounting purposes have resulted in an
    adjustment to diluted net income per common share as if they would be
    equity-settled.

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.

9. Share-based compensation:

a) Stock options:

(i) Outstanding stock options:

Common shares reserved for outstanding stock options at June 30, 2011:


                  Options Denominated in CAD     Options Denominated in USD
              ------------------------------ ------------------------------
                       Number       Weighted          Number       Weighted
                     of Stock        Average        of Stock        Average
                      Options Exercise Price         Options Exercise Price
-------------------------------------------- ------------------------------

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
 Granted                    -              -               -              -
 Exercised                  -              -        (427,815)         20.03
 Cancelled                  -              -               -              -
---------------------------------------------------------------------------
Outstanding at
 June 30, 2011              -            $ -       4,103,519        $ 19.09
---------------------------------------------------------------------------

Information regarding the stock options outstanding at June 30, 2011 is as follows:


                            Options Outstanding at   Options Exercisable at
                                     June 30, 2011            June 30, 2011
              ------------------------------------ ------------------------
                  Weighted
                   Average    Number of   Weighted    Number of    Weighted
Range of         Remaining        Stock    Average        Stock     Average
Exercise       Contractual      Options   Exercise      Options    Exercise
Prices         Life (Years) Outstanding      Price  Exercisable       Price
-------------------------------------------------- ------------------------

Options
 denominated
 in USD
 $6.33 to
  11.56                4.4    1,254,625     $ 6.55      818,220      $ 6.67
 $17.85 to
  22.52                1.6      975,100      20.43      975,100       20.43
 $23.92 to
  28.74                3.4    1,873,794      26.79    1,743,161       26.77
---------------------------------------------------------------------------
                       3.3    4,103,519    $ 19.09    3,536,481     $ 20.37
---------------------------------------------------------------------------

(ii) Compensation expense related to stock options:

For the three and six month periods ended June 30, 2011, compensation expense related to stock options included in cost of sales and operating expenses was $0.2 million (2010 - $0.3 million) and $0.5 million (2010 - $0.9 million), respectively. 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 June 30, 2011:


                                       SARs                          TSARs
              ----------------------------- ------------------------------
                   Number of       Exercise       Number of       Exercise
                       Units      Price USD           Units      Price USD
------------------------------------------- ------------------------------
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      634,245        $ 26.66       1,221,855        $ 26.64
  Granted              4,200          31.74           6,090          31.88
  Exercised           (2,700)         25.22          (2,050)         25.22
  Cancelled                -              -               -              -
--------------------------------------------------------------------------
Outstanding at
 June 30, 2011(1)    635,745        $ 26.70       1,225,895        $ 26.65
--------------------------------------------------------------------------

(1) At June 30, 2011, 353,593 SARs and TSARs were exercisable. 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 June 30, 2011 was $16.0 million compared with the recorded liability of $12.5 million. The difference between the fair value and the recorded liability of $3.5 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 June 30, 2011 using the Black-Scholes option pricing model.

For the three and six month periods ended June 30, 2011, compensation expense related to SARs and TSARs included a recovery in cost of sales and operating expenses of $1.1 million (2010 - recovery of $1.0 million) and an expense of $3.9 million (2010 - $2.2 million), respectively.

c) Deferred, restricted and performance share units:

Deferred, restricted and performance share units outstanding at June 30, 2011 are as follows:


                                              Number of          Number of
                  Number of Deferred   Restricted Share  Performance Share
                         Share Units              Units              Units
--------------------------------------------------------------------------
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
  Granted                        506                  -                  -
  Granted in-lieu
   of dividends                3,157                364              6,243
  Redeemed                         -                  -                  -
  Cancelled                        -                  -            (12,021)
--------------------------------------------------------------------------
Outstanding at
 June 30, 2011               586,531             64,402          1,104,500
--------------------------------------------------------------------------

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 June 30, 2011 was $56.5 million compared with the recorded liability of $47.0 million. The difference between the fair value and the recorded liability of $9.5 million will be recognized over the weighted average remaining service period of approximately 2 years.

For the three and six month periods ended June 30, 2011, compensation expense related to deferred, restricted and performance share units included in cost of sales and operating expenses was $2.6 million (2010 - recovery of $3.7 million) and $7.4 million (2010 - $6.0 million), respectively. This included an expense of $1.1 million (2010 - recovery of $5.0 million) and $1.7 million (2010 - $0.1 million) related to the effect of the change in the Company's share price for the three and six month periods ended June 30, 2011 respectively.

10. Changes in non-cash working capital:

Changes in non-cash working capital for the three and six month periods ended June 30, 2011 were as follows:


                               Three Months Ended         Six Months Ended
                         ------------------------ ------------------------
                               Jun 30      Jun 30       Jun 30      Jun 30
                                 2011        2010         2011        2010
------------------------------------------------- ------------------------
Decrease (increase) in
 non-cash working
 capital:
  Trade and other
   receivables               $ (6,418)     $ (632)   $ (31,417)  $ (14,560)
  Inventories                 (26,516)      2,712       (7,093)      4,788
  Prepaid expenses             (3,413)      2,639       (4,403)      6,040
  Trade, other payables
   and accrued
   liabilities                  4,322      (7,480)      50,923     (23,444)
------------------------------------------------- ------------------------
                              (32,025)     (2,761)       8,010     (27,176)
Adjustments for items
 not having a cash
 effect and working
 capital changes relating
 to taxes and interest
 paid                           6,228      (8,192)      12,178      (7,522)
------------------------------------------------ ------------------------
Changes in non-cash
 working capital having
 a cash effect              $ (25,797)  $ (10,953)    $ 20,188   $ (34,698)
------------------------------------------------- ------------------------
These changes relate to
 the following
 activities:
  Operating                 $ (22,227)  $ (13,459)    $ 22,259   $ (35,636)
  Investing                    (3,570)      2,506       (2,071)        938
------------------------------------------------- ------------------------
Changes in non-cash
 working capital            $ (25,797)  $ (10,953)    $ 20,188   $ (34,698)
------------------------------------------------- ------------------------

11. Financial instruments:

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


                                                     Jun 30         Dec 31
                                                       2011           2010
--------------------------------------------------------------------------
Financial assets:
 Financial asset at fair value through
  profit and loss (held for trading):
  Cash and cash equivalents(1)                    $ 245,624      $ 193,794
  Project financing reserve accounts included in
   other assets(1)                                   14,757         12,548

Loans and receivables:
 Trade and other receivables, excluding
  current portion of GeoPark financing              349,087        316,070
 GeoPark financing, including current
  portion                                            18,317         25,868
--------------------------------------------------------------------------
Total financial assets(2)                         $ 627,785      $ 548,280
--------------------------------------------------------------------------
Financial liabilities:
 Other financial liabilities:
  Trade, other payables and accrued
   liabilities                                    $ 309,962      $ 259,039
  Long-term debt, including current portion         926,458        946,941

 Financial liabilities held for trading:
  Derivative instruments designated as cash
   flow hedges(1)                                    44,427         43,488
--------------------------------------------------------------------------
Total financial liabilities                     $ 1,280,847    $ 1,249,468
--------------------------------------------------------------------------

(1) Cash and cash equivalents and project financing reserve accounts are
    measured at fair value based on quoted prices in active markets for
    identical assets. The euro hedges 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 June 30, 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 project financing 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 June 30, 2011. The notional amounts decrease over the expected repayment period. At June 30, 2011, these interest rate swap contracts had a negative fair value of $43.0 million (2010 - $43.5 million) recorded in other long-term liabilities. The fair value of these interest rate swap contracts will fluctuate until maturity. The Company also designates as cash flow hedges forward exchange contracts to sell euro at a fixed USD exchange rate. At June 30, 2011, the Company had outstanding forward exchange contracts designated as cash flow hedges to sell a notional amount of 41.3 million euro in exchange for US dollars and these euro contracts have a negative fair value of $1.4 million. Changes in fair value of derivative financial instruments designated as cash flow hedges have been recorded in other comprehensive income.

12. Transition to International Financial Reporting Standards:

For a description of the significant IFRS accounting policies, refer to note 2 of the condensed consolidated interim financial statements for the first quarter ended March 31, 2011. Those IFRS accounting policies have been applied in preparing the condensed consolidated interim financial statements for the period ended June 30, 2011, the comparative information presented in these interim financial statements for the three and six month periods ended June 30, 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 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) of the March 31, 2011 condensed consolidated interim financial statements for the impact on transition to IFRS.

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 were 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, by estimating 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 flows 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 June 30, 2010. For a summary of the adjustments to the Company's statement of financial position at January 1, 2010 and December 31, 2010, refer to note 18 of the condensed consolidated interim financial statements for the first quarter ended March 31, 2011.


                                                                    Jun 30
                                                                      2010
--------------------------------------------------------------------------
Total assets per Canadian GAAP                                 $ 2,951,203
 Leases (a)                                                         58,491
 Employee benefits (b)                                             (10,162)
 Site restoration costs (c)                                          1,259
 Borrowing costs (d)                                                15,774
 Investment in associates (i)                                        1,659
--------------------------------------------------------------------------
Total assets per IFRS                                          $ 3,018,224
--------------------------------------------------------------------------
Total liabilities per Canadian GAAP                            $ 1,711,759
 Leases (a)                                                         71,502
 Employee benefits (b)                                               5,312
 Site restoration costs (c)                                          4,888
 Borrowing costs (d)                                                 6,309
 Uncertain tax positions (e)                                         5,551
 Share-based payments (f)                                            2,613
 Deferred tax impact and other adjustments (g)                      (8,998)
 Reclassification of non-controlling interests (h)                (143,027)
--------------------------------------------------------------------------
Total liabilities per IFRS                                     $ 1,655,909
--------------------------------------------------------------------------
Total equity per Canadian GAAP                                 $ 1,239,444
 Leases (a)                                                        (13,011)
 Employee benefits (b)                                             (15,473)
 Site restoration costs (c)                                         (3,629)
 Borrowing costs (d)                                                 9,464
 Uncertain tax positions (e)                                        (5,551)
 Share-based payments (f)                                           (2,613)
 Deferred tax impact and other adjustments (g)                       8,998
 Reclassification of non-controlling interests (h)                 143,027
 Investment in associates (i)                                        1,659
--------------------------------------------------------------------------
Total equity per IFRS                                          $ 1,362,315
--------------------------------------------------------------------------

--------------------------------------------------------------------------
Total liabilities and equity per IFRS                          $ 3,018,224
--------------------------------------------------------------------------

Reconciliation of Net Income

The below table provides a summary of the adjustments to net income for the three and six month periods ended June 30, 2010. For a summary of the adjustments to net income for the year ended December 31, 2010, refer to note 18 of the condensed consolidated interim financial statements for the first quarter of 2011 ended March 31, 2011.


                                               Three months     Six months
                                                      ended          ended
                                                Jun 30 2010    Jun 30 2010
--------------------------------------------------------------------------
Net income per Canadian GAAP                       $ 11,735       $ 41,056
 Leases (a)                                             252            134
 Employee benefits (b)                                  421          1,176
 Site restoration costs (c)                              10            (15)
 Uncertain tax positions (e)                           (120)          (186)
 Share based payments (f)                             1,431         (1,984)
 Deferred tax impact and
  other adjustments (g)                                 304            136
 Investment in associates (i)                           771          1,532
--------------------------------------------------------------------------
 Total adjustments                                    3,069            793
--------------------------------------------------------------------------
Net income per IFRS attributable to Methanex
 Corporation shareholders                          $ 14,804       $ 41,849
Net loss per IFRS attributable to non-
 controlling interests                                 (565)        (1,390)
--------------------------------------------------------------------------
Total net income                                   $ 14,239       $ 40,459
--------------------------------------------------------------------------

Reconciliation of Comprehensive Income

The below table provides a summary of the adjustments to comprehensive income for the three and six month periods ended June 30, 2010. For a summary of the adjustments to comprehensive income for the year ended December 31, 2010, refer to note 18 of the condensed consolidated interim financial statements for the first quarter of 2011 ended March 31, 2011.


                                               Three months     Six months
                                                      ended          ended
                                                Jun 30 2010    Jun 30 2010
--------------------------------------------------------------------------
Comprehensive income per Canadian GAAP              $ 4,523       $ 29,793
 IFRS/CDN GAAP differences to net income (see
  table above)                                        3,069            793
 Borrowing costs transferred to property,
  plant and equipment (d)                                 -          4,503
--------------------------------------------------------------------------
Comprehensive income per IFRS attributable to
 Methanex Corporation shareholders                  $ 7,592       $ 35,089
Comprehensive loss per IFRS attributable to
 non-controlling interests                           (5,203)        (5,895)
--------------------------------------------------------------------------
Total comprehensive income                          $ 2,389       $ 29,194
--------------------------------------------------------------------------

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 determine the IFRS impact. As at June 30, 2010 this results in an increase to property, plant and equipment of $58.5 million and other long-term liabilities of $71.5 million with a corresponding decrease to retained earnings of $13.0 million.

In comparison to Canadian GAAP, for the three and six month periods ended June 30, 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.

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 June 30, 2010 this results in a decrease to retained earnings of $15.5 million, a decrease to other assets of $10.2 million and an increase to other long-term liabilities of $5.3 million.

In comparison to Canadian GAAP for the three and six month periods ended June 30, 2010, net earnings increased by approximately $0.4 million and $1.2 million, respectively as a result of lower pension expense due to immediate recognition to retained earnings of these actuarial losses on transition to IFRS.

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 June 30, 2010, adjustments to the financial statements to recognize site restorations costs 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 for the three and six month periods ended June 30, 2010, there was no significant impact to net earnings.

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 $15.8 million at June 30, 2010. The increase to property, plant and equipment is offset by an increase to accumulated other comprehensive income of approximately $9.5 and an increase in non-controlling interest of approximately $6.3 at June 30, 2010, with no impact on net 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 June 30, 2010, this resulted in an increase to income tax liabilities and a decrease to retained earnings of approximately $5.6 million in comparison to Canadian GAAP. For the three and six month periods ended June 30, 2010 this has resulted in a decrease in net earnings of $0.1 million and $0.2 million, respectively 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 difference in fair value method under IFRS compared with the intrinsic value method under Canadian GAAP, has resulted in an increase to net earnings of approximately $1.4 million and a decrease to net earnings of $1.9 million for the three and six month periods ended June 30, 2010, respectively. The difference in fair value method under IFRS compared with the intrinsic value method under Canadian GAAP resulted in an increase to other long-term liabilities of approximately $2.6 million and corresponding decrease to shareholders' equity as at June 30, 2010.

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 June 30, 2010, this has resulted in a decrease to deferred tax liabilities and increase to retained earnings of approximately $9.0 million, with no significant impact to net earnings.

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 $143.0 million as at June 30, 2010.

i) Investment in associates:

In 2010, the Company had a 20% equity interest in a DME production facility in China. The Company also had a methanol sales agreement to supply methanol to this facility and these adjustments represent the difference between Canadian GAAP and IFRS in the timing of recognition of earnings associated with methanol sales to the equity investment.


Methanex Corporation
Quarterly History(unaudited)

                      YTD    Q2     Q1  2010                          2009
                     2011  2011   2011    (3)   Q4    Q3    Q2    Q1    (3)
--------------------------------------------------------------------------
METHANOL SALES VOLUMES
(thousands of tonnes)

Company produced    1,818   970    848 3,540   831   885   900   924 3,764
Purchased methanol  1,499   664    835 2,880   806   792   678   604 1,546
Commission
 sales (1)            403   231    172   509   151   101   107   150   638
--------------------------------------------------------------------------
                    3,720 1,865  1,855 6,929 1,788 1,778 1,685 1,678 5,948
--------------------------------------------------------------------------
METHANOL PRODUCTION
(thousands of tonnes)

Chile                 325   142    183   935   208   194   229   304   942
Titan, Trinidad       307   186    121   891   233   217   224   217   764
Atlas, Trinidad
 (63.1%)              526   263    263   884   266   284    96   238 1,015
New Zealand           410   207    203   830   206   200   216   208   822
Medicine Hat           74    74      -     -     -     -     -     -     -
Egypt (60%)           209   178     31     -     -     -     -     -     -
--------------------------------------------------------------------------
                    1,851 1,050    801 3,540   913   895   765   967 3,543
--------------------------------------------------------------------------
AVERAGE REALIZED
 METHANOL PRICE (2)

 ($/tonne)            365   363    367   306   348   286   284   305   225
 ($/gallon)          1.10  1.09   1.10  0.92  1.05  0.86  0.85  0.92  0.68

PER SHARE
 INFORMATION(4)
 ($ per share)

  Basic net
   income (loss)     0.81  0.44   0.37  1.05  0.29  0.31  0.16  0.29  0.01
  Diluted net
   income (loss)     0.80  0.43   0.37  1.05  0.29  0.31  0.15  0.29  0.01
--------------------------------------------------------------------------

                       Q4    Q3     Q2    Q1
--------------------------------------------------------------------------
METHANOL SALES VOLUMES
(thousands of tonnes)

Company produced      880   943    941 1,000
Purchased methanol    467   480    329   270
Commission
 sales (1)            152   194    161   131
--------------------------------------------------------------------------
                    1,499 1,617  1,431 1,401
--------------------------------------------------------------------------
METHANOL PRODUCTION
(thousands of tonnes)

Chile                 265   197    252   228
Titan, Trinidad       188   188    165   223
Atlas, Trinidad
 (63.1%)              279   257    275   204
New Zealand           223   202    203   194
Medicine Hat            -     -      -     -
Egypt (60%)             -     -      -     -
--------------------------------------------
                      955   844    895   849
--------------------------------------------
AVERAGE REALIZED
 METHANOL PRICE (2)

 ($/tonne)            282   222    192   199
 ($/gallon)          0.85  0.67   0.58  0.60

PER SHARE
 INFORMATION(4)
 ($ per share)

  Basic net
   income (loss)     0.28 (0.01) (0.06)(0.20)
  Diluted net
   income (loss)     0.28 (0.01) (0.06)(0.20)
--------------------------------------------

(1) Commission sales represent volumes marketed on a commission basis
    related to the 36.9% of the Atlas methanol facility and 40% of the
    Egypt methanol facility that we do not own.

(2) Average realized price is calculated as revenue, excluding commissions
    earned and the Egypt non-controlling interest share of revenue, 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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