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Methanex Corporation (MX)
Exchange: Toronto Stock Exchange
$ 68.87
Apr 23, 2014, 9:19 AM EDT
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VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - July 20, 2005) - Methanex Corporation (TSX:MX)(NASDAQ:MEOH) recorded net income of US$62.9 million (US$0.53 diluted net income per share) and generated EBITDA(1) of US$119.6 million for the second quarter ended June 30, 2005. This compares with net income of US$52.4 million (US$0.42 diluted net income per share) and EBITDA of US$94.4 million for the same period in 2004. In the first quarter of 2005, the Company reported net income of US$76.0 million (US$0.63 diluted net income per share) and EBITDA of US$134.7 million.

Bruce Aitken, President and CEO of Methanex commented, "We are pleased that we were able to deliver another quarter of strong earnings and cash flows for our shareholders. Methanol pricing remained strong and relatively stable in the second quarter underpinned by continued high global energy prices. Our average realized price for the second quarter of 2005 was US$256 per tonne compared with US$262 per tonne for the previous quarter and US$225 per tonne for the second quarter of 2004."

Mr. Aitken continued, "In early July 2005 our new Chile IV plant reached its technical production milestone which means that the plant produced on-specification methanol at a rate of 85% of its design capacity. The addition of Chile IV increases our global low cost production capability to 5.8 million tonnes per year and significantly improves our ability to generate cash throughout the methanol price cycle. The plant is operating very well and we are currently shipping methanol from Chile IV to our customers."

Mr. Aitken added, "We continue to face uncertainty with respect to gas supply for our Chilean facilities, however, daily curtailments of natural gas to our plants have been reduced in July compared with June. We believe that the curtailments we have suffered in 2004 and 2005 have been aggravated by cold weather in Argentina. We are taking several short and long term steps to mitigate further production losses including re-scheduling maintenance turnarounds to the Southern Hemisphere winter months and working closely with our gas suppliers and the governments of Argentina and Chile."

Mr. Aitken concluded, "Our balance sheet and cash generation remained very strong this quarter. With US$266 million cash on hand at the end of the second quarter and a US$250 million undrawn credit facility, we have the financial capacity to complete our capital maintenance spending program, pursue new opportunities to enhance our strategic position in the methanol industry and continue to deliver on our commitment to maintain a prudent balance sheet and return excess cash to shareholders. As we enter the third quarter, our posted reference prices have been reduced slightly with prices for July ranging from US$267 to $299 per tonne (US$0.80 to $0.90 per gallon) before discounts. However, we believe that industry fundamentals will remain strong and above average pricing will be maintained for the third quarter."

A conference call is scheduled for Thursday, July 21 at 11:00 am EDT (8:00 am PDT) to review these second quarter results. To access the call, dial the Telus Conferencing operator ten minutes prior to the start of the call at (416) 883-0139, or toll free at (888) 458-1598. The security passcode for the call is 75577. A playback version of the conference call will be available for seven days at (877) 653-0545. The reservation number for the playback version is 261997. There will be a simultaneous audio-only webcast of the conference call, which can be accessed from our website at www.methanex.com.

Methanex is a Vancouver based, publicly-traded company engaged in the worldwide production and marketing of methanol. Methanex shares are listed for trading on the Toronto Stock Exchange in Canada under the trading symbol "MX" and on the Nasdaq National Market in the United States under the trading symbol "MEOH."

(1) For a definition of EBITDA, please refer to "Additional Information - Supplemental Non-GAAP Measure" included in the accompanying Interim Report.

Information in this news release and the attached management's discussion and analysis may contain forward-looking statements. By their nature, such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. They include world-wide economic conditions, actions of competitors, the availability and cost of gas feedstock, the ability to implement business strategies and pursue business opportunities, conditions in the methanol and other industries including the supply and demand for methanol and the risks attendant with producing and marketing methanol, integrating acquisitions and realizing anticipated synergies and carrying out major capital expenditure projects. Please also refer to our publicly available documents filed from time to time with securities commissions.


Interim Report

For the six months ended June 30, 2005

At July 19, 2005 the Company had 117,628,467 common shares issued and
outstanding and stock options exercisable for 828,475 additional
common shares.

Share Information

Methanex Corporation's common shares are listed for trading on the
Toronto Stock Exchange under the symbol MX and on the Nasdaq National
Market under the symbol MEOH.

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 web site 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 2005 Management's Discussion and Analysis should
be read in conjunction with the 2004 Annual Consolidated Financial
Statements and the Management's Discussion and Analysis included in
the Methanex 2004 Annual Report. The Methanex 2004 Annual Report and
additional information relating to Methanex is available on SEDAR at
www.sedar.com.

                                                THREE            SIX
                                         MONTHS ENDED   MONTHS ENDED
                                 --------------------  -------------
                                 JUN 30 MAR 31 JUN 30  JUN 30 JUN 30
($ millions, except where noted)   2005   2005   2004    2005   2004
--------------------------------------------------------------------
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Sales volumes (thousands
 of tonnes)
 Company produced:
  Chile and Trinidad              1,129  1,127    795   2,256  1,749
  Kitimat and New Zealand           203    248    438     451    711
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                                  1,332  1,375  1,233   2,707  2,460
Purchased methanol                  269    296    600     565  1,135
Commission sales(1)                 158    145      -     303      -
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                                  1,759  1,816  1,833   3,575  3,595

Average realized methanol
 price ($ per tonne)(2)             256    262    225     259    224
Methanex average non-discounted
 posted price ($ per tonne)(3)      308    310    252     309    251
Operating income                   98.1  114.7   77.8   212.8  151.1
Net income                         62.9   76.0   52.4   139.0   99.2
Cash flows from operating
 activities(4)                     99.1  116.0   81.8   215.2  162.5
EBITDA(5)                         119.6  134.7   94.4   254.3  187.7
Basic net income per
 common share                      0.53   0.63   0.43    1.17   0.81
Diluted net income per
 common share                      0.53   0.63   0.42    1.16   0.80
Weighted average number of
 common shares outstanding
 (millions of shares)             118.4  120.0  122.9   119.2  122.5
Diluted weighted average number
 of common shares outstanding
 (millions of shares)             118.9  121.3  124.2   120.0  123.9
Number of common shares
 outstanding, end of period
 (millions of shares)             117.6  119.5  122.9   117.6  122.9
--------------------------------------------------------------------

(1) Commission sales volumes represent volumes marketed on a
    commission basis. Commissions earned are included in revenue.

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

(3) Represents the average of our non-discounted posted prices in
    North America, Europe and Asia Pacific weighted by sales volume.

(4) Before changes in non-cash working capital.

(5) EBITDA differs from the most comparable GAAP measure, cash flows
    from operating activities, primarily because it does not include
    changes in non-cash working capital and cash flows related to
    interest expense, interest and other income and income taxes. For
    a reconciliation of cash flows from operating activities to
    EBITDA, refer to "Additional Information - Supplemental Non-GAAP
    Measure".

STRONG FINANCIAL RESULTS

For the second quarter of 2005 we recorded EBITDA of $119.6 million and net income of $62.9 million (diluted net income per share of $0.53). This compares with EBITDA of $134.7 million and net income of $76.0 million (diluted net income per share of $0.63) for the first quarter of 2005 and EBITDA of $94.4 million and net income of $52.4 million (diluted net income per share of $0.42) for the second quarter of 2004. For the six month period ended June 30, 2005, we recorded EBITDA of $254.3 million and net income of $139.0 million (diluted net income per share of $1.16) compared with EBITDA of $187.7 million and net income of $99.2 million (diluted net income per share of $0.80) during the same period in 2004.

During the second quarter of 2005, we experienced curtailments of natural gas to our Chilean facilities and as a result we experienced a total reduction of approximately 56,000 tonnes of methanol production at our Chilean facilities in Q2 2005 compared with what we would otherwise have produced, which takes into account planned gradual production increases associated with the start up of Chile IV. Refer to Production Summary for further information regarding curtailments of natural gas to our facilities in Chile.

EBITDA

Commencing in 2005, we are providing separate discussion of the change in EBITDA related to our Kitimat and New Zealand facilities. Accordingly, the average realized price, total cash cost and sales volume variances represent the change in EBITDA excluding the change related to sales of Kitimat and New Zealand produced methanol. The change in cash margin earned by our Kitimat and New Zealand facilities is presented and analyzed separately. For a further discussion of the definitions and calculations used in our EBITDA variance analysis, refer to How We Analyze Our Business provided at the end of this Management's Discussion and Analysis.


The change in EBITDA resulted from the following:

                                 Q2-2005       Q2-2005   YTD Q2 2005
                           COMPARED WITH COMPARED WITH COMPARED WITH
($ millions)                     Q1-2005       Q2-2004   YTD Q2 2004
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Increase (decrease) related
 to changes in:
 Average realized 
  price                               (7)           37            79
 Total cash cost                      (3)          (18)          (22)
 Sales volumes                         -            36            52
 Margin earned from Kitimat
  and New Zealand facilities          (7)          (26)          (33)
 Margin on the sale of
  purchased methanol                   2            (4)           (9)
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                                     (15)           25            67
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Average realized methanol price

We continue to operate in a favourable price environment underpinned by high North American natural gas prices and high global energy prices. Our average realized price for the second quarter of 2005 was $256 per tonne compared with $262 per tonne for the first quarter of 2005 and $225 per tonne for the second quarter of 2004. Our average realized price for the first half of 2005 was $259 per tonne compared with $224 per tonne for the first half of 2004. The impact on EBITDA of changes in the average realized price for produced methanol is included in the above table.

The methanol industry is highly competitive and prices are affected by supply and demand fundamentals. We publish non-discounted prices for each major methanol market and offer discounts to customers based on various factors. For the second quarter of 2005 our average realized methanol price was approximately 17% lower than our average non-discounted posted price. This compares with approximately 15% lower for the first quarter of 2005 and 11% lower for the second quarter of 2004. In order to reduce the impact of cyclical pricing on our earnings, for a portion of our production volume we have positioned ourselves with certain global customers under long-term contracts where prices are either fixed or linked to our costs plus a margin. For the second quarter 2005, sales volumes under these long-term contracts represent a higher proportion of our total sales volumes as compared with the first quarter and as a result the discount increased. The discount from our non-discounted posted prices should narrow during periods of lower pricing and during periods of higher total sales volumes. We believe it is important to maintain financial flexibility throughout the methanol price cycle and these strategic contracts are a component of our prudent approach to liquidity.

Total cash cost

Maintaining a low cost structure provides a competitive advantage in a commodity industry and is a key element of our strategy. Our low cost production facilities in Chile and Trinidad are underpinned by long-term low cost take-or-pay natural gas purchase agreements with pricing terms that are linked to methanol prices above a pre-determined floor price. We believe this enables these facilities to be competitive throughout the methanol price cycle.

Total cash costs for the second quarter of 2005 were higher than in the first quarter of 2005 by $3 million primarily as a result of higher natural gas costs for our Atlas facility as reduced production caused by a technical problem impacted our gas consumption efficiency rate. Total cash costs for the second quarter of 2005 and the six months ended June 30, 2005 were higher than in the comparable periods in 2004 by $18 million and $22 million, respectively. The increase in cash costs for these periods primarily relates to the impact of higher methanol prices on natural gas costs at our Chile and Trinidad facilities.

Sales volumes

Our sales volumes of methanol produced at our low cost Chile and Trinidad facilities for the second quarter of 2005 of 1.1 million tonnes was comparable to the first quarter of 2005. During the second quarter of 2004 our sales volumes of Chile and Trinidad production was 0.8 million tonnes. For the six months ended June 30, 2005, we sold 2.3 million tonnes of methanol produced at our Chile and Trinidad facilities compared with 1.7 million tonnes in the same period in 2004. The increase in sales volumes in 2005 compared with 2004 is primarily related to sales of production from our Atlas facility, which commenced operations during the third quarter of 2004. The impact on EBITDA of higher sales volumes of methanol produced at our Chile and Trinidad facilities is included in the EBITDA variance analysis table.

Margin earned from Kitimat and New Zealand facilities

The cash margin earned from our Kitimat and New Zealand facilities during the second quarter of 2005 was $7 million lower than in the first quarter of 2005 primarily due to lower sales volumes of production from our New Zealand facility and higher costs for natural gas at both facilities. Lower cash margins for our Kitimat and New Zealand facilities decreased EBITDA for the second quarter and first half of 2005 compared with the same periods in 2004 by $26 million and $33 million, respectively. The decrease in cash margin primarily relates to lower sales volumes of New Zealand production, increased cash costs in New Zealand and higher natural gas costs for our Kitimat facility. Our costs in New Zealand were lower in 2004, primarily as a result of favourable New Zealand dollar foreign currency forward contracts that expired during the third quarter of 2004.

Margin on the sale of purchased methanol

We purchase additional methanol produced by others on the spot market or through long-term offtake contracts in order to meet customer needs and support our marketing efforts. Consequently, we realize holding gains or losses on the resale of this product depending on the methanol price at the time of resale. We incurred a loss of $1 million on the sale of 0.3 million tonnes during the second quarter of 2005 compared with a loss of $3 million on the sale of 0.3 million tonnes for the first quarter of 2005 and a gain of $3 million on the sale of 0.6 million tonnes for the second quarter of 2004. For the six month period ended June 30, 2005, we incurred a loss of $4 million on the resale of purchased methanol compared with a gain of $5 million for the same period in 2004.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization was $22 million for the second quarter of 2005 compared with $17 million for the same period in 2004. For the six month period ended June 30, 2005, depreciation and amortization was $41 million compared with $37 million for the same period in 2004. The increase in depreciation and amortization for 2005 compared with 2004 is primarily due to the depreciation of the Atlas methanol facility which commenced operations during the third quarter of 2004. The increase in depreciation and amortization for the second quarter of 2005 compared with the first quarter is primarily due to depreciation recorded for our Titan methanol facility during a maintenance turnaround in the second quarter.


INTEREST EXPENSE & INTEREST AND OTHER INCOME

                             THREE MONTHS ENDED     SIX MONTHS ENDED
                             ------------------     ----------------
($ millions)                 JUN 30 MAR 31 JUN 30   JUN 30    JUN 30
                               2005   2005 2004       2005      2004
--------------------------------------------------------------------
--------------------------------------------------------------------
Interest expense before
 interest capitalized          $ 14   $ 13   $ 12     $ 27      $ 27
Less capitalized interest:
 Chile IV                        (3)    (4)    (3)      (7)       (8)
 Atlas                            -      -     (4)       -        (6)
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Interest expense               $ 11   $  9   $  5     $ 20      $ 13
--------------------------------------------------------------------

--------------------------------------------------------------------
Interest and other income      $  -   $  1   $  -     $  1      $  4
--------------------------------------------------------------------

Interest incurred during construction is capitalized to the cost of the asset until the asset is substantively complete and ready for productive use. The Atlas methanol facility commenced operations during the third quarter of 2004 and Chile IV entered the start up phase of production and commenced operations in June 2005.

The change in interest and other income for the six month period ended June 30, 2005 compared with the same period in 2004 relates primarily to the impact on earnings of fluctuations in foreign exchange rates.

INCOME TAXES

The effective income tax rate for the second quarter of 2005 was 28% compared with 28% for the second quarter of 2004. The statutory tax rate in Chile and Trinidad, where we earn substantially all of our pre-tax earnings, is 35%. Our 850,000 tonne per year Titan facility in Trinidad was subject to a tax holiday that expired in June 2005. The Atlas facility in Trinidad has an agreement whereby the tax rate will increase over a ten year period from 0% to 35%.


PRODUCTION SUMMARY

                                                       YTD       YTD
                         Q2-2005  Q1-2005 Q2-2004  Q2 2005   Q2 2004
(thousands of       CAPA- PRODUC-  PRODUC- PRODUC-  PRODUC-   PRODUC-
 tonnes)            CITY    TION     TION    TION     TION      TION
--------------------------------------------------------------------
--------------------------------------------------------------------
Chile and Trinidad:
 Chile I, II, III
  and IV(1)          764     702     727      666    1,429     1,362
 Titan               212     135     202      220      337       410
 Atlas (63.1%
  interest)          267     252     235        -      487         -
--------------------------------------------------------------------
                   1,243   1,089   1,164      886    2,253     1,772
Other:
 New Zealand         132     103     120      229      223       518
 Kitimat             125     120     119      121      239       243
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                     257     223     239      350      462       761
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                   1,500   1,312   1,403    1,236    2,715     2,533
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(1) The Q2 2005 capacity for our Chilean facilities includes the
    actual production volume during the period for Chile IV.

During the second quarter of 2005 we experienced curtailments of natural gas to our Chilean facilities and as a result we experienced a total reduction of approximately 56,000 tonnes of methanol production at our Chile facilities in Q2 2005 compared to what we would otherwise have produced, which takes into account planned gradual production increases associated with the start up of Chile IV. Argentina has been experiencing an energy crisis brought about primarily as a result of price regulation of domestic natural gas and a dramatic devaluation of the Argentina peso against the U.S. dollar. As a result, domestic demand for natural gas has increased and, at the same time, low gas prices have discouraged new supply and investments in infrastructure. In 2004, gas curtailments resulted in the loss of approximately 50,000 tonnes of production at our Chilean facilities, all of which occurred during the Southern Hemisphere winter months of May through August. In May 2005, we lost a small amount of methanol production over a two-day period due to gas curtailments. However, in mid-June, curtailments recommenced and were more significant than those experienced in 2004. These curtailments have ranged widely in June and July, from days when more than half of the nominated gas we requested was curtailed to other days when we received all of our nominated gas.

To mitigate the impact of current curtailments, we have rescheduled regular maintenance turnarounds for the Chile II and III plants, initially planned for later this year, to take place during July and August, respectively. Over the period from July 1 to July 19, we have experienced a reduction of approximately 15,000 tonnes of methanol production at our Chilean facilities compared to what we would otherwise have produced, which takes into account gradual production increases associated with the start up of Chile IV and excludes foregone production associated with a regular maintenance turnaround for Chile II.

We believe that recent curtailments have been influenced by actions of the Argentine government, including the reallocation of gas entitlements, as well as by cold weather conditions, greater domestic demand in Argentina, the timing of increases of gas production and other dynamics related to the energy crisis in Argentina. We have had discussions with Argentine and Chilean governmental authorities and natural gas suppliers to explore alternatives to address the current and any future potential curtailments. However, we cannot assure you that our discussions will lead to successful actions to address this situation or that production losses will not persist beyond the Southern Hemisphere winter months.

During the second quarter of 2005, we successfully completed a planned catalyst replacement and turnaround at our Titan facility in Trinidad. The Atlas plant has been undergoing a three-week maintenance turnaround since mid-July to correct a technical problem that caused the plant to produce below capacity.

We have restructured our New Zealand operations over the past two years due to natural gas supply constraints and have reduced our operations to the 530,000 tonne per year Waitara Valley plant. We have positioned the New Zealand operations to be flexible and will continue to critically assess our operating plan during 2005 with consideration given to prevailing market conditions and our ability to generate positive cash margins.

During the first and second quarters of 2005, production from our Kitimat facility was near capacity. We are currently exploring alternatives for our Kitimat facility, which could result in the shutdown of this plant. However, we are obligated to supply ammonia under an offtake agreement with the former owner of the ammonia production assets located adjacent to our Kitimat methanol facility and this limits our flexibility to shut down the plant prior to December 31, 2005. In addition, if we shut down this plant, we will be required to make a buy-out payment to the public utility that transports natural gas to the plant, and we will incur employee severance and other costs.

SUPPLY/DEMAND FUNDAMENTALS

Supply and demand fundamentals remained favourable during the second quarter of 2005 and resulted in the continuation of a high methanol price environment. Our 840,000 tonne per year Chile IV facility commenced operations late in the second quarter. The 1.8 million tonne MHTL plant in Trinidad will be the next large scale methanol plant to be completed in 2005 with operations expected to commence towards the end of the third quarter. We believe that the impact of these supply additions in 2005 will be largely offset by increased demand and further shutdowns of higher cost methanol facilities. The 0.6 million tonne per year Celanese Clear Lake methanol facility in Texas shut down in June 2005 and approximately 2.8 million tonnes of North American production capacity continues to operate, including our 0.5 million tonne per year Kitimat facility. We also have 0.5 million tonnes per year of flexible production in New Zealand which is currently operating.

In addition to these large-scale capacity additions there are a number of smaller-scale plants in China expected to be completed during 2005. We continue to believe that substantially all Chinese methanol production will be consumed within the Chinese market. There are difficulties associated with exporting methanol from China, including product quality, plant reliability issues and high costs.


METHANEX NON-DISCOUNTED REGIONAL POSTED CONTRACT PRICES
                                       JUL          APR
US$ per tonne                         2005         2005
-------------------------------------------------------
-------------------------------------------------------
United States                         $299         $316
Europe(i)                             $267         $304
Asia                                  $280         $302

(i) The European contract transaction price is EUR220 at
    July 2005 (April 2005 - EUR230) and is presented in
    the above table in United States dollars converted
    at the date of settlement.
-------------------------------------------------------

Methanex non-discounted posted prices for July 2005 are $299 per tonne ($0.90 per gallon) in the United States and $280 per tonne in Asia. In Europe, the Q3 2005 posted contract price decreased by EUR10 to settle at EUR220 (US$267 per tonne at the time of settlement compared with US$304 at April 2005). Currently, spot prices in the United States are approximately $259 per tonne ($0.78 per gallon) and spot prices in Europe (FOB Rotterdam) are approximately EUR210 per tonne. Prices in Asia are currently between $235 and $245 per tonne.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities before changes in non-cash working capital in the second quarter of 2005 were $99.1 million compared with $81.8 million for the same period in 2004. For the six-month period ended June 30, 2005, cash flows from operating activities before changes in non-cash working capital were $215.2 million compared with $162.5 million for the same period in 2004. The changes in cash flows from operating activities before changes in non-cash working capital are primarily the result of changes in the level of earnings.

During the second quarter of 2005, we repurchased for cancellation 1.7 million shares at an average price of US$17.99 per share under a normal course issuer bid that expired May 16, 2005. On closing of this bid, we had repurchased a total of 9.2 million common shares. On May 5, 2005, we announced a new normal course issuer bid that commenced May 17, 2005 under which we may repurchase for cancellation up to 5.9 million of our common shares. During the second quarter of 2005, we repurchased 0.6 million common shares under this bid at an average price of US$18.83 per share.

Also during the second quarter of 2005, our Board of Directors approved a 37.5% increase in our regular quarterly dividend to shareholders, from US$0.08 per share to US$0.11 per share. Accordingly, during the second quarter we paid a quarterly dividend of US$0.11 per share, or approximately $13 million.

Capital expenditures for Chile IV during the second quarter of 2005 were $20 million and the remaining costs to complete the facility at June 30, 2005 are estimated to be $20 million. During the second quarter of 2005, we incurred $23 million of other capital expenditures, primarily related to the catalyst replacement and turnaround completed at our Titan facility during the quarter, expenditures in advance of the July Atlas maintenance turnaround and construction of in-market storage facilities in Korea.

We have excellent financial capacity and flexibility. Our cash balance at June 30, 2005 was $266 million and we have an undrawn $250 million credit facility. During the second quarter we finalized a $250 million five-year revolving credit facility, which replaces our previous three-year facility, which would have expired at the end of 2006. The planned capital maintenance expenditure program directed towards major maintenance, turnarounds and catalyst changes is estimated to total approximately $75 million for the period from the third quarter of 2005 to the end of 2007. We have $250 million of unsecured notes due August 2005 and are currently reviewing our refinancing options.


The credit ratings for our unsecured notes at
June 30, 2005 were as follows:
-------------------------------------------------------
-------------------------------------------------------
Standard & Poor's Rating Services        BBB- (negative)
Moody's Investor Services                   Ba1 (stable)
Fitch Ratings                               BBB (stable)

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

We have the financial capacity to complete Chile IV and our capital maintenance spending program, pursue new opportunities to enhance our strategic position in the methanol industry and continue to deliver on our commitment to maintain a prudent balance sheet and return excess cash to shareholders.

SHORT-TERM OUTLOOK

As we enter the third quarter, methanol pricing remains strong. Planned plant outages during the third quarter, including turnarounds at our Chile II, Chile III and Atlas facilities, will reduce available methanol supply. We believe that the start up of the MHTL plant in Trinidad, expected towards the end of the third quarter of 2005, will be largely offset by further shutdowns of higher cost methanol production and increased demand. The methanol price will ultimately depend on industry operating rates, the rate of industry restructuring and the strength of global demand. We believe that our excellent financial position and financial flexibility, outstanding global supply network and low-cost position will ensure that Methanex continues to be the leader in the methanol industry.

ADDITIONAL INFORMATION

SUPPLEMENTAL NON-GAAP MEASURE

In addition to providing measures prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), Methanex presents a supplemental non-GAAP measure, EBITDA. This supplemental non-GAAP measure does not have a standardized meaning prescribed by GAAP and therefore is unlikely to be comparable to similar measures presented by other companies. Management believes this measure is useful in assessing performance and highlighting trends on an overall basis. Management also believes EBITDA is frequently used by securities analysts and investors when comparing our results with those of other companies. EBITDA differs from the most comparable GAAP measure, cash flows from operating activities, primarily because it does not include changes in non-cash working capital and cash flows related to interest expense, interest and other income and income taxes. This measure should be considered in addition to, and not as a substitute for, net income, cash flows from operating activities and other measures of financial performance and liquidity reported in accordance with GAAP.

EBITDA


The following table shows a reconciliation of cash flows from 
operating activities to EBITDA:
                              THREE MONTHS ENDED    SIX MONTHS ENDED
                      --------------------------    ----------------
                      JUN 30    MAR 31    JUN 30    JUN 30    JUN 30
($ thousands)           2005      2005      2004      2005      2004
--------------------------------------------------------------------
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Cash flows from
 operating
 activities        $ 115,488 $  93,821 $ 103,546 $ 209,309 $ 157,900
Add (deduct):
 Changes in non-cash
  working capital    (16,344)   22,215   (21,708)    5,871     4,584
 Other non-cash
  operating expenses  (4,791)   (4,500)   (2,130)   (9,291)   (3,764)
 Interest expense     10,514     9,061     4,800    19,575    12,629
 Interest and other
  income                (108)   (1,262)      431    (1,370)   (3,559)
 Income taxes -
  current             14,831    15,365     9,426    30,196    19,926
--------------------------------------------------------------------
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EBITDA             $ 119,590 $ 134,700 $  94,365 $ 254,290 $ 187,716
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QUARTERLY FINANCIAL DATA (unaudited)

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

                                         THREE MONTHS ENDED         
                                ------------------------------------
($ thousands, except            JUN 30    MAR 31    DEC 31    SEP 30
 per share amounts)               2005      2005      2004      2004
--------------------------------------------------------------------
--------------------------------------------------------------------

Revenue                      $ 410,914 $ 438,300 $ 485,408 $ 428,840
Net income                      62,935    76,032    66,061    71,178
Basic net income per
 common share                     0.53      0.63      0.55      0.59
Diluted net income per
 common share                     0.53      0.63      0.54      0.58
--------------------------------------------------------------------

                                         THREE MONTHS ENDED
                                ------------------------------------
($ thousands, except            JUN 30    MAR 31    DEC 31    SEP 30
 per share amounts)               2004      2004      2003      2003
--------------------------------------------------------------------
Revenue                      $ 412,283 $ 392,953 $ 358,421 $ 340,180
Net income (loss)               52,375    46,830  (111,696)   (9,253)
Basic net income (loss)
 per common share                 0.43      0.39     (0.93)    (0.08)
Diluted net income (loss)
 per common share                 0.42      0.38     (0.93)    (0.08)
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Our quarterly revenues are not materially impacted by seasonality.

HOW WE ANALYZE OUR BUSINESS

We review our results of operations by analyzing changes in the components of our EBITDA, depreciation and amortization, interest expense, interest and other income and income taxes. In addition to the methanol that we produce at our facilities, we also purchase and re-sell methanol produced by others. We analyze the impact of produced methanol sales separately from purchased methanol sales as the margin characteristics of each are very different.

The discussion of purchased methanol and its impact on our results of operations is more meaningfully discussed on a net margin basis, because the cost of sales of purchased methanol consists principally of the cost of the methanol itself, which is directly related to the price of methanol at the time of purchase. We previously allocated storage and handling costs to each source of product for the purposes of this analysis. These costs are now included in the cost variance described below as they do not fluctuate significantly from one period to another and are not impacted by the sales volumes of purchased methanol.

Commencing in 2005, we are providing discussion of the change in EBITDA related to our Kitimat and New Zealand facilities separately from the change in EBITDA related to our Chile and Trinidad facilities. The average realized price, total cash cost and sales volume variances described below and included in this Management's Discussion and Analaysis represent the change in EBITDA excluding the change related to sales of Kitimat and New Zealand produced methanol. The change in cash margin related to our Kitimat and New Zealand facilities is presented separately. Natural gas is the primary feedstock at our methanol production facilities. Our low cost Chile and Trinidad production hubs are underpinned by long-term low cost take-or-pay natural gas purchase contracts with pricing terms that vary with methanol prices. We believe this relationship enables these facilities to be competitive throughout the methanol price cycle and accordingly, changes in the average realized price, sales volume and total cash cost for methanol produced at these facilities are the key drivers of changes in our EBITDA. In comparison, our facilities in Kitimat and New Zealand incur higher production costs and their operating results represent a smaller proportion of our EBITDA.

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


PRICE   The change in our EBITDA as a result of changes in average
        realized price is calculated as the difference from
        period-to-period in the selling price of produced methanol
        multiplied by the current period sales volume of methanol
        produced at our Chile and Trinidad facilities. Sales
        under long-term contracts where the prices are either fixed
        or linked to our costs plus a margin are included as sales
        of produced methanol.

COST    The change in our EBITDA as a result of changes in cash
        costs is calculated as the difference from period-to-period
        in variable cash cost per tonne multiplied by the sales
        volume of methanol produced at our Chile and Trinidad
        facilities in the current period, plus the change in fixed
        production costs, selling, general and administrative
        expenses and fixed storage and handling costs.

VOLUME  The change in our EBITDA as a result of changes in sales
        volume is calculated as the difference from period-to-period
        in the sales volume of methanol produced at our Chile and
        Trinidad facilities multiplied by the margin per tonne for
        the prior period. The margin per tonne is calculated as the
        difference between the selling price per tonne and the
        variable cash cost per tonne.

FORWARD-LOOKING STATEMENTS

Statements made in this document that are based on our current expectations, estimates and projections constitute forward-looking statements. Forward-looking statements are based on our experience and perception of trends, current conditions, expected future developments and other factors. By their nature, forward-looking statements involve uncertainties and risks that may cause the stated outcome to differ materially from the actual outcome.

Important factors that can cause anticipated outcomes to differ materially from actual outcomes include worldwide economic conditions; conditions in the methanol and other industries, including the supply and demand balance for methanol; actions of competitors; changes in laws or regulations; the ability to implement business strategies, pursue business opportunities and maintain and enhance our competitive advantages; the risks attendant with methanol production and marketing, including operational disruption; the risks associated with carrying out capital expenditure projects, including disruptions during the start up phase of our Chile IV plant or that this project will be completed on budget; availability and price of natural gas feedstock; foreign exchange risk; raw material and other production costs; transportation costs; the ability to attract and retain qualified personnel; the risks associated with investments and operations in multiple jurisdictions and other risks that we may describe in publicly available documents filed from time to time with securities commissions.

Having in mind these and other factors, many of which are described in this document, readers are cautioned not to place undue reliance on forward-looking statements. We do not guarantee that anticipated outcomes made in forward-looking statements will be realized.


METHANEX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
(thousands of U.S. dollars, except number of shares and per share
amounts)

                        THREE MONTHS ENDED          SIX MONTHS ENDED
                 ------------------------- -------------------------
                       JUN 30       JUN 30       JUN 30       JUN 30
                         2005         2004         2005         2004
--------------------------------------------------------------------
--------------------------------------------------------------------

Revenue          $    410,914 $    412,283 $    849,214 $    805,236
Cost of sales
 and operating
 expenses             291,324      317,918      594,924      617,520
Depreciation and
 amortization          21,531       16,565       41,484       36,629
--------------------------------------------------------------------
Operating income
 before
 undernoted items      98,059       77,800      212,806      151,087
Interest expense
 (note 7)             (10,514)      (4,800)     (19,575)     (12,629)
Interest and
 other income
 (expense)                108         (431)       1,370        3,559
--------------------------------------------------------------------
Income before
 income taxes          87,653       72,569      194,601      142,017
Income taxes:
 Current              (14,831)      (9,426)     (30,196)     (19,926)
 Future                (9,887)     (10,768)     (25,438)     (22,886)
--------------------------------------------------------------------
                      (24,718)     (20,194)     (55,634)     (42,812)
--------------------------------------------------------------------
Net income       $     62,935 $     52,375 $    138,967 $     99,205
--------------------------------------------------------------------

Net income per
 common share:
 Basic           $       0.53 $       0.43 $       1.17 $       0.81
 Diluted         $       0.53 $       0.42 $       1.16 $       0.80

Weighted average
 number of common
 shares
 outstanding:
 Basic            118,369,623  122,915,405  119,162,266  122,503,561
 Diluted          118,938,355  124,247,101  119,982,283  123,903,147

Period end
 number of common
 shares
 outstanding      117,627,617  122,907,392  117,627,617  122,907,392

See accompanying notes to consolidated financial statements.


METHANEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(thousands of U.S. dollars)
                                              JUN 30          DEC 31
                                                2005            2004
--------------------------------------------------------------------
--------------------------------------------------------------------
                                          (unaudited)
ASSETS

Current assets:
 Cash and cash equivalents              $    266,112    $    210,049
 Receivables                                 245,509         293,207
 Inventories                                 144,400         142,164
 Prepaid expenses                             18,664          16,480
--------------------------------------------------------------------
                                             674,685         661,900
Property, plant and
 equipment (note 2)                        1,390,680       1,366,787
Other assets                                  91,612          96,194
--------------------------------------------------------------------
                                        $  2,156,977    $  2,124,881
--------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 Accounts payable and accrued
  liabilities                           $    181,901    $    230,758
 Current maturities on long-term
  debt and other long-term
  liabilities                                271,588         268,303
--------------------------------------------------------------------
                                             453,489         499,061
Long-term debt (note 4)                      343,932         350,868
Other long-term liabilities                   58,423          60,170
Future income taxes                          290,976         265,538
Shareholders' equity:
 Capital stock                               519,465         523,255
 Contributed surplus                           2,820           3,454
 Retained earnings                           487,872         422,535
--------------------------------------------------------------------
                                           1,010,157         949,244
--------------------------------------------------------------------
                                        $  2,156,977    $  2,124,881
--------------------------------------------------------------------

See accompanying notes to consolidated financial statements.


METHANEX CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited)
(thousands of U.S. dollars, except number of common shares)

               NUMBER OF              CONTRI-                  TOTAL
                  COMMON   CAPITAL     BUTED   RETAINED SHAREHOLDERS'
                  SHARES     STOCK   SURPLUS   EARNINGS       EQUITY
--------------------------------------------------------------------
--------------------------------------------------------------------

Balance,
 December 31,
 2003        120,007,767 $ 499,258   $ 7,234  $ 279,039    $ 785,531
Year ended
 December 31,
 2004
 Net income            -         -         -    236,444      236,444
 Compensation
  expense
  related to
  stock
  options
  included in
  net income           -         -     1,738          -        1,738
 Proceeds on
  issue of
  shares on
  exercise
  of stock
  options      6,158,250    44,654         -          -       44,654
 Reclassi-
  fication
  of grant
  date fair
  value on
  exercise of
  stock 
  options              -     5,518    (5,518)         -            -
 Payment for
  shares
  repurchased (6,143,600)  (26,175)        -    (59,545)     (85,720)
 Dividend
  payments             -         -         -    (33,403)     (33,403)
--------------------------------------------------------------------
Balance,
 December 31,
 2004        120,022,417 $ 523,255   $ 3,454  $ 422,535    $ 949,244
Three month
 period ended
 March 31, 
 2005
 Net income            -         -         -     76,032       76,032
 Compensation
  expense
  related to
  stock 
  options
  included in
  net income           -         -       530          -          530
 Proceeds on
  issue of
  shares on
  exercise of
  stock 
  options        760,375     6,269         -          -        6,269
 Reclassi-
  fication
  of grant
  date fair
  value on
  exercise of
  stock
  options              -     1,111    (1,111)         -            -
 Payment for
  shares
  repurchased (1,321,500)   (5,679)        -    (18,821)     (24,500)
 Dividend
  payments             -         -         -     (9,599)      (9,599)
--------------------------------------------------------------------
Balance,
 March
 31, 2005    119,461,292 $ 524,956   $ 2,873  $ 470,147  $   997,976
Three month
 period ended
 June 30, 2005
 Net income            -         -         -     62,935       62,935
 Compensation
  expense
  related to
  stock 
  options
  included in
  net income           -         -       786          -          786
 Proceeds on
  issue of
  shares on
  exercise of
  stock 
  options        494,225     3,675         -          -        3,675
 Reclassi-
  fication
  of grant
  date fair
  value on
  exercise of
  stock 
  options              -       839      (839)         -            -
 Payment for
  shares
  repurchased (2,327,900)  (10,005)        -    (32,268)     (42,273)
 Dividend
 payments              -         -         -    (12,942)     (12,942)
--------------------------------------------------------------------
Balance, 
 June
 30, 2005    117,627,617 $ 519,465   $ 2,820  $ 487,872  $ 1,010,157
--------------------------------------------------------------------

See accompanying notes to consolidated 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
                         2005         2004         2005         2004
--------------------------------------------------------------------
--------------------------------------------------------------------

CASH FLOWS FROM
 OPERATING
 ACTIVITIES
Net income       $     62,935 $     52,375 $    138,967 $     99,205
Add:
 Depreciation and
  amortization         21,531       16,565       41,484       36,629
 Future income
  taxes                 9,887       10,768       25,438       22,886
 Other                  4,791        2,130        9,291        3,764
--------------------------------------------------------------------
Cash flows from
 operating
 activities
 before
 undernoted
 changes               99,144       81,838      215,180      162,484
Receivables            14,108       (4,073)      47,698      (21,196)
Inventories             7,287       35,316         (152)      15,967
Prepaid expenses       (7,477)      (3,531)      (2,184)      (2,351)
Accounts payable
 and accrued
 liabilities            2,426       (6,004)     (51,233)       2,996
--------------------------------------------------------------------
                      115,488      103,546      209,309      157,900
--------------------------------------------------------------------

CASH FLOWS FROM
 FINANCING
 ACTIVITIES
Payment for
 shares
 repurchased          (42,273)     (17,916)     (66,773)     (17,916)
Dividend
 payments             (12,942)      (7,095)     (22,541)     (14,418)
Proceeds on
 issue of shares
 on exercise of
 stock options          3,675       15,568        9,944       31,811
Repayment of
 limited recourse
 long-term debt        (4,032)           -       (4,032)    (182,758)
Proceeds on
 issue of limited
 recourse
 long-term debt             -       10,627            -       14,887
Release of
 restricted cash            -            -            -       14,258
Repayment of
 other long-term
 liabilities           (6,708)         (13)      (7,640)      (3,926)
--------------------------------------------------------------------
                      (62,280)       1,171      (91,042)    (158,062)
--------------------------------------------------------------------

CASH FLOWS FROM
 INVESTING
 ACTIVITIES
Plant and
 equipment under
 construction         (19,766)     (55,284)     (31,958)     (86,615)
Property, plant
 and equipment        (22,758)      (4,105)     (31,236)      (7,337)
Accounts payable
 and accrued
 liabilities
 related to
 capital
 expenditures            (895)       9,666        2,376       10,528
Other assets           (1,091)      (2,106)      (1,386)      (2,106)
--------------------------------------------------------------------
                      (44,510)     (51,829)     (62,204)     (85,530)
--------------------------------------------------------------------
Increase
 (decrease) in
 cash and cash
 equivalents            8,698       52,888       56,063      (85,692)
Cash and cash
 equivalents,
 beginning of
 period               257,414      149,283      210,049      287,863
--------------------------------------------------------------------
Cash and cash
 equivalents, end
 of period       $    266,112 $    202,171 $    266,112 $    202,171
--------------------------------------------------------------------

SUPPLEMENTARY
 CASH FLOW
 INFORMATION
Interest paid,
 net of
 capitalized
 interest        $      1,421 $          - $     17,327 $     18,022
Income taxes
 paid, net of
 amounts
 refunded        $     17,113 $     22,470 $     23,852 $     27,675
--------------------------------------------------------------------

See accompanying notes to consolidated financial statements.


METHANEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Except where otherwise noted, tabular dollar amounts are stated in
thousands of United States dollars.

1. BASIS OF PRESENTATION:

These interim consolidated financial statements are prepared in accordance with generally accepted accounting principles in Canada on a basis consistent with those followed in the most recent annual consolidated financial statements. These interim consolidated financial statements do not include all note disclosures required by Canadian generally accepted accounting principles for annual financial statements, and therefore should be read in conjunction with the annual consolidated financial statements included in the Methanex Corporation 2004 Annual Report.

2. PROPERTY, PLANT AND EQUIPMENT:


                                       ACCUMULATED
                              COST    DEPRECIATION    NET BOOK VALUE
--------------------------------------------------------------------
--------------------------------------------------------------------
June 30, 2005
Plant and equipment    $ 2,697,002     $ 1,339,671       $ 1,357,331
Other                       64,759          31,410            33,349
--------------------------------------------------------------------
                       $ 2,761,761     $ 1,371,081       $ 1,390,680
--------------------------------------------------------------------
December 31, 2004
Plant and equipment    $ 2,422,148     $ 1,302,701       $ 1,119,447
Plant and equipment
 under construction        222,443               -           222,443
Other                       53,976          29,079            24,897
--------------------------------------------------------------------
                       $ 2,698,567     $ 1,331,780       $ 1,366,787
--------------------------------------------------------------------

During June 2005, Chile IV entered the start up phase of operations
and the cost has been reclassified from plant and equipment under
construction to plant and equipment.

3. INTEREST IN ATLAS JOINT VENTURE:

The Company has a 63.1% joint venture interest in Atlas Methanol Company (Atlas). The joint venture has constructed a 1.7 million tonne per year methanol plant in Trinidad that began operations in July 2004.

Included in the consolidated financial statements are the following amounts representing the Company's proportionate interest in the Atlas joint venture:


                                     JUN 30, 2005        DEC 31, 2004
---------------------------------------------------------------------
---------------------------------------------------------------------
Consolidated Balance Sheets:
 Cash and cash equivalents           $     19,992        $     13,981
 Other current assets                      22,041              21,677
 Property, plant and equipment            282,416             284,336
 Other assets                              14,836              14,930
 Current liabilities, excluding
  current maturities on
  long-term debt                           11,602              30,112
 Long-term debt, including
  current maturities                      154,980             159,012
---------------------------------------------------------------------


                       THREE MONTHS ENDED           SIX MONTHS ENDED
                    ---------------------     ----------------------
                       JUN 30,     JUN 30,       JUN 30,      JUN 30,
                         2005        2004          2005         2004
--------------------------------------------------------------------
--------------------------------------------------------------------
Consolidated
 Statements
 of Income:

 Revenue            $  62,426   $       -     $ 123,110    $       -
 Expenses              37,283           -        71,965            -
--------------------------------------------------------------------
 Net income         $  25,143   $       -     $  51,145    $       -
--------------------------------------------------------------------

Consolidated
 Statements of
 Cash Flows:
 Cash inflows
  from operating
  activities        $  30,981   $       -     $  38,093  $         -
 Cash inflows (outflows)
  from financing
  activities           (4,032)     10,627        (4,032)      14,887
 Cash outflows
  from investing
  activities           (2,216)    (20,067)       (3,808)     (42,414)
--------------------------------------------------------------------
--------------------------------------------------------------------


4. LONG-TERM DEBT:

                                    JUN 30, 2005        DEC 31, 2004
--------------------------------------------------------------------
--------------------------------------------------------------------
Unsecured notes                     $    449,989        $    449,920
Atlas limited recourse debt
 facilities                              154,980             159,012
--------------------------------------------------------------------
                                         604,969             608,932
Less current maturities                 (261,037)           (258,064)
--------------------------------------------------------------------
                                    $    343,932        $    350,868
--------------------------------------------------------------------

The limited recourse debt facilities of Atlas are described as
limited recourse as they are secured only by the assets of the joint
venture.


5. 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,
                         2005        2004          2005         2004
--------------------------------------------------------------------
--------------------------------------------------------------------
Denominator for
 basic net
 income per
 common share     118,369,623 122,915,405   119,162,266  122,503,561
Effect of
 dilutive stock
 options              568,732   1,331,696       820,017    1,399,586
--------------------------------------------------------------------
Denominator for
 diluted net
 income per
 common share     118,938,355 124,247,101   119,982,283  123,903,147
--------------------------------------------------------------------


6. STOCK-BASED COMPENSATION:

(a) Stock options:

i) Incentive stock options:

Common shares reserved for outstanding incentive stock options at
June 30, 2005:

                      OPTIONS DENOMINATED        OPTIONS DENOMINATED
                                  IN CAD$                     IN US$
                    ---------------------     ----------------------
                                 WEIGHTED                   WEIGHTED
                    NUMBER OF     AVERAGE     NUMBER OF      AVERAGE
                        STOCK    EXERCISE         STOCK     EXERCISE
                       OPTIONS      PRICE       OPTIONS        PRICE
--------------------------------------------------------------------
--------------------------------------------------------------------
Outstanding at
 December 31,
 2004                 784,675   $   10.82     1,397,000    $    8.36
 Granted                    -           -       652,750        17.73
 Exercised           (311,550)      12.26      (370,325)        7.81
 Cancelled            (15,500)      14.63             -            -
--------------------------------------------------------------------
Outstanding at
 March 31, 2005       457,625   $    9.70     1,679,425    $   12.13
 Exercised            (92,250)      10.06      (326,475)        8.08
 Cancelled                  -           -        (4,850)        9.64
--------------------------------------------------------------------
Outstanding at
 June 30, 2005        365,375   $    9.61     1,348,100    $   13.12
--------------------------------------------------------------------


As at June 30, 2005, 365,375 incentive stock options denominated in
CAD$ and 408,950 incentive stock options denominated in US$ had
vested and were exercisable at average prices of CAD$9.61 and
US$8.17, respectively.

ii) Performance stock options:

Common shares reserved for outstanding performance stock options at
June 30, 2005:


                                       NUMBER OF    AVERAGE EXERCISE
                                   STOCK OPTIONS         PRICE (CAD$)
--------------------------------------------------------------------
--------------------------------------------------------------------
Outstanding at December 31, 2004         204,000           $    4.47
Exercised                                (78,500)               4.47
--------------------------------------------------------------------
Outstanding at March 31, 2005            125,500           $    4.47
Exercised                                (75,500)               4.47
--------------------------------------------------------------------
Outstanding at June 30, 2005              50,000           $    4.47
--------------------------------------------------------------------

As at June 30, 2005, all outstanding performance stock options have
vested and are exercisable.

iii) Compensation expense related to stock options:

Compensation expense related to stock options included in cost of sales and operating expenses is $0.8 million for the three month period ended June 30, 2005 (2004 - $0.3 million) and $1.3 million for the six month period ended June 30, 2005 (2004 - $1.1 million). The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:


                                            2005                2004
--------------------------------------------------------------------
--------------------------------------------------------------------
Risk-free interest rate                        4%                  3%
Expected dividend yield                        2%                  2%
Expected life                            5 years             5 years
Expected volatility                           43%                 35%
--------------------------------------------------------------------

For the six month period ended June 30, 2005, the weighted average grant date fair value of stock options granted was US$6.59 per share (2004 - US$3.63 per share).

(b) Deferred and restricted share units:


Deferred and restricted share units outstanding at 
June 30, 2005 are as follows:

                                       NUMBER OF           NUMBER OF
                                  DEFERRED SHARE    RESTRICTED SHARE
                                           UNITS               UNITS
--------------------------------------------------------------------
--------------------------------------------------------------------
Outstanding at December 31, 2004         455,519           1,014,313
Granted                                   73,912             561,150
Dividend equivalents                       1,876               4,167
Redeemed                                       -              (8,366)
--------------------------------------------------------------------
Outstanding at March 31, 2005            531,307           1,571,264
Granted                                    3,163                   -
Dividend equivalents                       3,549               9,465
Redeemed                                       -             (21,306)
Cancelled                                      -             (33,900)
--------------------------------------------------------------------
Outstanding at June 30, 2005             538,019           1,525,523
--------------------------------------------------------------------

The fair value of deferred and restricted share units at June 30, 2005 was $35.9 million compared with an accrued value of $20.0 million. Compensation expense related to deferred and restricted share units included in cost of sales and operating expenses is $1.0 million for the three month period ended June 30, 2005 (2004 - $2.7 million) and $5.0 for the six month period ended June 30, 2005 (2004 - $4.8 million).

7. INTEREST EXPENSE:


                       THREE MONTHS ENDED           SIX MONTHS ENDED
                    ---------------------     ----------------------
                       JUN 30,     JUN 30,       JUN 30,      JUN 30,
                         2005        2004          2005         2004
--------------------------------------------------------------------
--------------------------------------------------------------------
Interest expense
 before capitalized
 interest           $  14,072   $  12,338     $  27,339    $  27,102
Less capitalized
 interest              (3,558)     (7,538)       (7,764)     (14,473)
--------------------------------------------------------------------
                    $  10,514   $   4,800     $  19,575    $  12,629
--------------------------------------------------------------------

8. RETIREMENT PLANS:

Total net pension expense for the Company's defined benefit and defined contribution pension plans during the three and six month periods ended June 30, 2005 was $1.5 million (2004 - $1.7 million) and $2.5 million (2004 - $3.3 million), respectively.


METHANEX CORPORATION
QUARTERLY HISTORY (unaudited)

                      2005    Q2    Q1  2004    Q4    Q3    Q2    Q1
--------------------------------------------------------------------
METHANOL SALES
 VOLUMES
(thousands of tonnes)

 Company produced    2,707 1,332 1,375 5,298 1,531 1,307 1,233 1,227
 Purchased product     565   269   296 1,960   402   423   600   535
 Commission sales(1)   303   158   145   169   128    41     -     -
--------------------------------------------------------------------
                     3,575 1,759 1,816 7,427 2,061 1,771 1,833 1,762
--------------------------------------------------------------------
METHANOL PRODUCTION
(thousands of tonnes)

 Chile               1,429   702   727 2,692   690   640   666   696
 Titan, Trinidad       337   135   202   740   154   176   220   190
 Atlas, Trinidad
 (63.1%)               487   252   235   421   264   157     -     -
 New Zealand           223   103   120 1,088   266   304   229   289
 Kitimat               239   120   119   486   122   121   121   122
--------------------------------------------------------------------
                     2,715 1,312 1,403 5,427 1,496 1,398 1,236 1,297
--------------------------------------------------------------------
METHANOL PRICE(2)
 ($/tonne)             259   256   262   237   251   248   225   223
 ($/gallon)           0.78  0.77  0.79  0.71  0.75  0.75  0.68  0.67

PER SHARE 
 INFORMATION
 ($ per share)
 Basic net income 
  (loss)            $ 1.17  0.53  0.63  1.95  0.55  0.59  0.43  0.39
 Diluted net 
  income (loss)     $ 1.16  0.53  0.63  1.92  0.54  0.58  0.42  0.38


                                        2003    Q4    Q3    Q2    Q1
--------------------------------------------------------------------
METHANOL SALES
 VOLUMES
(thousands of tonnes)

 Company produced                      4,933 1,328 1,200 1,211 1,194
 Purchased product                     1,392   399   350   332   311
 Commission sales(1)                     254     -     -    55   199
--------------------------------------------------------------------
                                       6,579 1,727 1,550 1,598 1,704
--------------------------------------------------------------------
METHANOL PRODUCTION
(thousands of tonnes)

 Chile                                 2,704   640   624   732   708
 Titan, Trinidad                         577   222   202   153     -
 Atlas, Trinidad (63.1%)                   -     -     -     -     -
 New Zealand                             968   158   229   225   356
 Kitimat                                 449   109    91   122   127
--------------------------------------------------------------------
                                       4,698 1,129 1,146 1,232 1,191
--------------------------------------------------------------------
METHANOL PRICE(2)
 ($/tonne)                               224   208   219   245   227
 ($/gallon)                             0.67  0.63  0.66  0.74  0.68

PER SHARE 
 INFORMATION 
 ($ per share)
 Basic net income
  (loss)            $                   0.01 (0.93)(0.08) 0.38  0.59
 Diluted net 
  income (loss)     $                   0.01 (0.93)(0.08) 0.37  0.57

(1) Commission sales volumes include the 36.9% of production
    from Atlas that we do not own. Commission sales volumes 
    prior to 2004 represents commission sales of production
    from Titan Methanol Company prior to our acquisition of Titan
    effective May 1, 2003.

(2) Average realized price is calculated as revenue,
    net of commissions earned, divided by the total sales volumes
    of produced and purchased methanol. Prior to 2005, in-market
    distribution costs were also deducted from revenue when 
    calculating average realized price for presentation
    in the Management's Discussion and Analysis. The
    presentation of average realized price for prior 
    periods has been restated.


FOR FURTHER INFORMATION PLEASE CONTACT:

Methanex Corporation
Wendy Bach
Director, Investor Relations
(604) 661-2600 or Toll-Free: 1-800-661-8851

invest@methanex.com
www.methanex.com

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