Methanex Reports Third Quarter Results

Methanex Reports Third Quarter Results 
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 10/25/12 -- Methanex
Corporation (TSX:MX)(NASDAQ:MEOH) -  
For the third quarter of 2012, Methanex reported Adjusted EBITDA(1)
of $104 million and Adjusted net income(1) of $36 million ($0.38 per
share on a diluted basis(1)). This compares with Adjusted EBITDA(1)
of $113 million and Adjusted net income(1) of $44 million ($0.47 per
share on a diluted basis(1)) for the second quarter of 2012. 
Bruce Aitken, President and CEO of Methanex commented, "We reported a
decline in EBITDA compared to last quarter as we realized a lower
methanol price. Entering the fourth quarter, steady methanol demand
and supply outages across the industry have resulted in upward
pressure on spot methanol prices, and today, we announced an increase
of $43 per tonne to our North-American non-discounted price. Longer
term, the outlook for the industry and pricing environment looks very
attractive, as demand growth is expected to significantly outpace new
capacity additions over the next few years." 
Mr. Aitken added, "We continue to make good progress on the
initiatives to increase production in New Zealand and Medicine Hat,
which could add up to one million tonnes of annual capacity by the
end of 2013. The Louisiana project is also progressing well and is on
track to add an additional one million tonnes of annual capacity by
the end of 2014. In total, these projects have the potential to
increase our operating capacity by approximately 2 million tonnes
over the next couple of years and improve cash generation
significantly." 
Mr. Aitken concluded, "With over US$400 million of cash on hand, an
undrawn credit facility, a robust balance sheet, and strong cash flow
generation, we are well positioned to invest in the Louisiana project
and other strategic growth opportunities and continue to deliver on
our commitment to return excess cash to shareholders." 
A conference call is scheduled for October 25, 2012 at 12:00 noon ET
(9:00 am PT) to review these third quarter results. To access the
call, dial the Conferencing operator ten minutes prior to the start
of the call at (416) 340-8527, or toll free at (877) 240-9772. 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 6328000. 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 the
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 Third Quarter 2012 press release contains forward-looking
statements with respect to us and the chemical industry. Refer to
Forward-Looking Information Warning in the attached Third Quarter
2012 Management's Discussion and Analysis for more information. 
(1) Adjusted EBITDA, Adjusted net income and Adjusted diluted net
income per common share are non-GAAP measures which do not have any
standardized meaning prescribed by GAAP. These measures represent the
amounts that are attributable to Methanex Corporation shareholders
and are calculated by excluding amounts associated with the 40%
non-controlling interest in the methanol facility in Egypt, the
mark-to-market impact of items which impact the comparability of our
earnings from one period to another, which currently include only the
mark-to-market impact of share-based compensation as a result of
changes in our share price, and Louisiana project relocation expenses
and charges. Refer to Additional Information - Supplemental Non-GAAP
Measures on the attached Interim Report for the three months ended
September 30, 2012 for reconciliations to the most comparable GAAP
measures. 
Interim Report for the Three Months Ended September 30, 2012 
At October 24, 2012 the Company had 93,975,455 common shares issued
and outstanding and stock options exercisable for 3,317,462
additional common shares. 
Share Information 
Methanex Corporation's common shares are listed for trading on the
Toronto Stock Exchange under the symbol MX, on the Nasdaq Global
Market under the symbol MEOH and on the foreign securities market of
the Santiago Stock Exchange in Chile under the trading symbol
Methanex. 
Investor Information 
All financial reports, news releases and corporate information can be
accessed on our website at http://www.methanex.com/. 
Transfer Agents & Registrars 
CIBC Mellon Trust Company 320 Bay Street Toronto, Ontario, Canada M5H
4A6 Toll free in North America: 1-800-387-0825  


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

 
THIRD QUARTER MANAGEMENT'S DISCUSSION AND ANALYSIS 
Except where otherwise noted, all currency amounts are stated in
United States dollars. 
FINANCIAL AND OPERATIONAL HIGHLIGHTS 
A summary of net income (loss) attributable to Methanex shareholders,
Adjusted net income(1) and Adjusted diluted net income per common
share(1) is as follows: 


                                                             
                              Three Months Ended         Nine Months Ended  
                       -----------------------------------------------------
($ millions except                                                          
 number of shares and     Sep 30     Jun 30     Sep 30     Sep 30     Sep 30
 per share amounts)         2012       2012       2011       2012       2011
----------------------------------------------------------------------------
Net income (loss)      $     (3)  $      52  $      62  $      72  $     137
 attributable to                                                            
 Methanex shareholders                                                      
  Mark-to-market impact        -       (10)       (22)          6       (20)
   of share-based                                                           
   compensation, net of                                                     
   tax                                                                      
                                                                            
  Louisiana project                                                         
   relocation expenses                                                      
   and charges, net of                                                      
   tax                                                                      
    Cash expense              21          2          -         23          -
    Non-cash charge           18          -          -         18          -
----------------------------------------------------------------------------
Adjusted net income(1) $      36  $      44  $      40  $     119  $     117
----------------------------------------------------------------------------
Diluted weighted            93.9       95.1       94.4       94.9       94.4
 average shares                                                             
 outstanding (millions)                                                     
Adjusted diluted net   $    0.38  $    0.47  $    0.43  $    1.26  $    1.24
 income per common                                                          
 share(1)                                                                   
----------------------------------------------------------------------------
 
--  We recorded Adjusted EBITDA(1) of $104 million for the third quarter of
    2012 compared with $113 million for the second quarter of 2012. The
    decrease in Adjusted EBITDA(1) was primarily due to a decrease in
    average realized price from $384 per tonne for the second quarter of
    2012 to $373 per tonne for the third quarter of 2012. 
--  Production for the third quarter of 2012 was 1,025,000 tonnes compared
    with 1,034,000 tonnes for the second quarter of 2012. During the third
    quarter of 2012, we commenced production at the second Motunui facility
    and we produced 346,000 tonnes in New Zealand compared with 210,000
    tonnes in the second quarter of 2012. In Egypt, we produced 62,000
    tonnes in the third quarter of 2012 compared with 164,000 tonnes in the
    second quarter due to a planned maintenance shutdown and the impact of
    natural gas curtailments. 
--  During the third quarter of 2012, sales of Methanex-produced methanol
    were 1,053,000 tonnes compared with 1,001,000 in the second quarter of
    2012. 
--  In July 2012, we reached a final investment decision to proceed with the
    project to relocate an idle Chile facility to Geismar, Louisiana. The
    project will add one million tonnes of annual production capacity and is
    expected to be operational by the end of 2014. We have commenced
    dismantling of the plant and expect to receive all key construction-
    related permits by the end of 2012. During the third quarter of 2012,
    we recorded a $35 million cash expense ($21 million after-tax) to
    earnings related to Louisiana project relocation expenses that are not
    eligible for capitalization. In addition, we recorded a $26 million non-
    cash charge ($18 million after-tax) to earnings related to the Chile
    facility that is being relocated to Louisiana. 
--  During the third quarter of 2012, we paid a $0.185 per share dividend to
    shareholders for a total of $17 million.
 
(1) These items are non-GAAP measures that do not have any standardized
    meaning prescribed by GAAP and therefore are unlikely to be comparable
    to similar measures presented by other companies. Refer to Additional
    Information - Supplemental Non-GAAP Measures for a description of each
    non-GAAP measure and reconciliations to the most comparable GAAP
    measures.

 
This Third Quarter 2012 Management's Discussion and Analysis ("MD&A")
dated October 24, 2012 for Methanex Corporation ("the Company")
should be read in conjunction with the Company's condensed
consolidated interim financial statements for the period ended
September 30, 2012 as well as the 2011 Annual Consolidated Financial
Statements and MD&A included in the Methanex 2011 Annual Report.
Unless otherwise indicated, the financial information presented in
this interim report is prepared in accordance with International
Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB). The Methanex 2011 Annual Report
and additional information relating to Methanex is available on SEDAR
at www.sedar.com and on EDGAR at www.sec.gov. 


 
FINANCIAL AND OPERATIONAL DATA                                              
                                                                            
                                                               Nine Months  
                                       Three Months Ended         Ended     
                                    ----------------------------------------
($ millions, except per share         Sep 30  Jun 30  Sep 30  Sep 30  Sep 30
 amounts and where noted)               2012    2012    2011    2012    2011
----------------------------------------------------------------------------
Production (thousands of tonnes)       1,025   1,034   1,035   3,004   2,886
 (attributable to Methanex                                                  
 shareholders)                                                              
Sales volumes (thousands of tonnes):                                        
  Methanex-produced methanol           1,053   1,001     983   2,980   2,801
   (attributable to Methanex                                                
   shareholders)                                                            
  Purchased methanol                     641     569     672   1,901   2,171
  Commission sales(1)                    205     276     235     679     638
----------------------------------------------------------------------------
Total sales volumes                    1,899   1,846   1,890   5,560   5,610
Methanex average non-discounted          433     452     445     440     434
 posted price ($ per tonne)(2)                                              
Average realized price ($ per            373     384     377     380     369
 tonne)(3)                                                                  
Adjusted EBITDA (attributable to         104     113     111     310     294
 Methanex shareholders)(4)                                                  
Cash flows from operating activities     131     135     119     360     321
Adjusted cash flows from operating       103     110     104     302     270
 activities (attributable to                                                
 Methanex shareholders)(4)                                                  
Net income (loss) attributable to        (3)      52      62      72     137
 Methanex shareholders                                                      
Adjusted net income (attributable to      36      44      40     119     117
 Methanex shareholders)(4)                                                  
Basic net income (loss) per common    (0.03)    0.56    0.67    0.77    1.48
 share (attributable to Methanex                                            
 shareholders)                                                              
Diluted net income (loss) per common  (0.03)    0.50    0.59    0.76    1.38
 share (attributable to Methanex                                            
 shareholders)                                                              
Adjusted diluted net income per         0.38    0.47    0.43    1.26    1.24
 common share (attributable to                                              
 Methanex shareholders)(4,5)                                                
Common share information (millions                                          
 of shares):                                                                
  Weighted average number of common       94      94      93      94      93
   shares                                                                   
  Diluted weighted average number of      94      95      94      95      94
   common shares                                                            
  Number of common shares                 94      94      93      94      93
   outstanding, end of period                                               
----------------------------------------------------------------------------
(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 Methanex-produced (attributable to
    Methanex shareholders) and purchased methanol.                          
(4) These items are non-GAAP measures that do not have any standardized
    meaning prescribed by GAAP and therefore are unlikely to be comparable
    to similar measures presented by other companies. Refer to Additional
    Information - Supplemental Non-GAAP Measures for a description of each
    non-GAAP measure and reconciliations to the most comparable GAAP
    measures.           
(5) For the three month period ended September 30, 2012, stock options and  
    tandem share appreciation rights have been excluded from the diluted net
    income per common share (attributable to Methanex shareholders) as their
    effect would be anti-dilutive. However, for the calculation of adjusted
    diluted net income per common share (attributable to Methanex
    shareholders) these items have been included in the denominator and the
    diluted weighted average number of common shares is 95.0 million. 
                                                                            
                                                                            
PRODUCTION SUMMARY                                                          
                                                            YTD Q3    YTD Q3
                          Q3 2012      Q2 2012   Q3 2011      2012      2011
                    Capacity  Produc-  Produc-   Produc-   Produc-   Produc-
(thousands of tonnes)     (1)    tion     tion      tion      tion      tion
----------------------------------------------------------------------------
Chile I, III and IV(2)   700      59       82       116       254        441
New Zealand(3)           558     346      210       209       730        619
Atlas (Trinidad)         288     255      264       170       646        696
 (63.1% interest)                                                           
Titan (Trinidad)         225     186      196       224       597        531
Egypt (60% interest)     190      62      164       191       428        400
Medicine Hat             118     117      118       125       349        199
----------------------------------------------------------------------------
                       2,079   1,025    1,034     1,035     3,004      2,886
----------------------------------------------------------------------------
(1) The production capacity of our facilities may be higher than original   
    nameplate capacity as, over time, these figures have been adjusted to   
    reflect ongoing operating efficiencies.                                 
(2) In July 2012, we reached a final investment decision to proceed with the
    project to relocate the Chile II facility to Geismar, Louisiana. The
    Chile capacity in the above table excludes the 1.0 million tonnes of
    annual production capacity which is being relocated to Louisiana.       
(3) The production capacity of New Zealand represents the two 0.85 million  
    tonne facilities at Motunui and the 0.53 million tonne facility at
    Waitara Valley. In July, we restarted the second Motunui facility, but
    due to current distillation capacity constraints at the Motunui site,
    the combined production capacity of both plants is approximately 1.5
    million tonnes, compared with the combined nameplate capacity of
    1.7 - 1.9 million tonnes, depending on natural gas composition (refer to
    the New Zealand section for more information).                

 
Chile 
We continue to operate our Chile facilities 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 2011 Annual Report for more information. 
During the third quarter of 2012, we produced 59,000 tonnes in Chile
operating one plant at approximately 20% of capacity. 
While investments have been made over the last few years for natural
gas exploration and development in southern Chile, the timelines for
significant increases in gas production are much longer than we had
originally anticipated and existing gas fields are experiencing
declines. As a result, the short-term outlook for gas supply in Chile
continues to be challenging. In early October 2012, we completed a
restructuring of our Chile operations which reduced the size of our
workforce by 48 people and will result in a $5 million pre-tax charge
in the fourth quarter of 2012. 
We are continuing to pursue investment opportunities with Empresa
Nacional del Petroleo (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 September 30, 2012, we had
contributed approximately $113 million and the carrying amount of our
investment was $71 million. Over the past few years, we have also
provided funding to support and accelerate GeoPark's natural gas
exploration and development activities in southern Chile. GeoPark has
agreed to supply us with all natural gas sourced from the Fell block
under a ten-year exclusive supply arrangement that commenced in 2008.
During the third quarter of 2012, approximately 90% of production at
our Chilean facilities was produced with natural gas supplied from
the Fell and Dorado Riquelme blocks. We are also participating in
other exploration blocks with international oil and gas companies and
as at September 30, 2012, we had contributed $15 million for our
share of the exploration costs. 
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 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 in the level of natural gas supply or that we will be able
to source sufficient natural gas to operate any capacity in Chile or
that we will have sufficient future cash flows from Chile to support
the carrying value of our Chilean assets and that this will not have
an adverse impact on our results of operations and financial
condition. 
New Zealand 
Our New Zealand methanol facilities produced 346,000 tonnes of
methanol in the third quarter of 2012 compared with 210,000 tonnes in
the second quarter of 2012. We restarted a second Motunui facility in
July 2012 which added 650,000 tonnes of annual production capacity to
our New Zealand operations and brings the current site capacity to
approximately 1.5 million tonnes. We are currently assessing the
feasibility of debottlenecking the Motunui site and the potential to
restart our nearby 530,000 tonne Waitara Valley plant which could add
up to a further 900,000 tonnes of annual production capacity in New
Zealand by the end of 2013. 
Trinidad 
In Trinidad, we own 100% of the Titan facility with an annual
production capacity of 900,000 tonnes and have a 63.1% interest in
the Atlas facility with an annual production capacity of 1,150,000
tonnes (63.1% interest). The Titan facility produced 186,000 tonnes
in the third quarter of 2012 compared with 196,000 tonnes in the
second quarter of 2012. Production in the third quarter of 2012 was
impacted by unplanned maintenance outages and periodic natural gas
curtailments. 
The Atlas facility produced 255,000 tonnes in the third quarter of
2012 compared with 264,000 tonnes in the second quarter of 2012. The
Atlas facility was shut down at the end of September 2012 for repairs
and is expected to return to production at the beginning of November
2012. 
We continue to experience some natural gas curtailments to our
Trinidad facilities due to a mismatch between upstream commitments to
supply the Natural Gas Company in Trinidad (NGC) and downstream
demand from NGC's customers which becomes apparent when an upstream
supply issue arises. We are engaged with key stakeholders to find a
solution to this issue, but in the meantime we expect to continue to
experience some gas curtailments to our Trinidad site. 
Egypt 
The Egypt methanol facility produced 62,000 tonnes (60% interest) in
the third quarter of 2012 compared with 164,000 tonnes in the second
quarter of 2012. We have a 60% equity interest in the facility and
marketing rights for 100% of the production. Production from the
Egypt facility in the third quarter of 2012 was lower than the second
quarter of 2012 due to a planned maintenance outage which was
completed in mid-July and natural gas supply restrictions. 
During the third quarter of 2012, the Egypt facility experienced
periodic natural gas supply constraints as a result of increased
seasonal electricity demand and operating issues with the upstream
gas infrastructure. This situation has continued into the fourth
quarter of 2012 and may persist in the future. 
Medicine Hat 
Our 470,000 tonne per year facility in Medicine Hat, Alberta produced
117,000 tonnes in the third quarter of 2012 compared with 118,000
tonnes during the second quarter of 2012. We are currently assessing
the feasibility of debottlenecking the Medicine Hat facility which
could add a further 90,000 tonnes of annual production capacity to
our Medicine Hat operations. 
FINANCIAL RESULTS 
For the third quarter of 2012 we recorded Adjusted EBITDA of $104
million and Adjusted net income of $36 million ($0.38 per share on a
diluted basis). This compares with Adjusted EBITDA of $113 million
and Adjusted net income of $44 million ($0.47 per share on a diluted
basis) for the second quarter of 2012 and Adjusted EBITDA of $111
million and Adjusted net income of $40 million ($0.43 per share on a
diluted basis) for the third quarter of 2011. 
We calculate Adjusted EBITDA and Adjusted net income by excluding
amounts associated with the 40% non-controlling interest in Egypt
that we do not own, the mark-to-market impact of share-based
compensation as a result of changes in our share price and items
which are considered by management to be non-operational. Refer to
Additional Information - Supplemental Non-GAAP Measures for a further
discussion on how we calculate these measures. 
A reconciliation from net income (loss) attributable to Methanex
shareholders to Adjusted net income and the calculation of Adjusted
diluted net income per common share is as follows: 


 
                               Three Months Ended          Nine Months Ended
($ millions except     -----------------------------------------------------
 number of shares and       Sep 30     Jun 30     Sep 30   Sep 30     Sep 30
 per share amounts)           2012       2012       2011     2012       2011
----------------------------------------------------------------------------
Net income (loss)        $     (3)  $      52  $      62  $    72  $     137
 attributable to                                                            
 Methanex shareholders                                                      
 Mark-to-market impact                                                      
  of share-based                                                            
 compensation, net of                                                       
  tax                                                                       
                                 -       (10)       (22)        6       (20)
 Louisiana project                                                          
  relocation expenses                                                       
  and charges, net of                                                       
  tax                                                                       
  Cash expense                  21          2          -       23          -
  Non-cash charge               18          -          -       18          -
----------------------------------------------------------------------------
Adjusted net income(1)   $      36  $      44  $      40  $   119  $     117
----------------------------------------------------------------------------
Diluted weighted              93.9       95.1       94.4     94.9       94.4
 average shares                                                             
 outstanding (millions)                                                     
Adjusted diluted net     $    0.38  $    0.47  $    0.43  $  1.26  $    1.24
 income per common                                                          
 share(1)(2)                                                                
----------------------------------------------------------------------------

 
We review our financial results by analyzing changes in Adjusted
EBITDA, depreciation and amortization, mark-to-market impact of
share-based compensation, Louisiana project relocation expenses and
charges, finance costs, finance income and other expenses and income
taxes. A summary of our consolidated statements of income are as
follows: 


 
                             Three Months Ended            Nine Months Ended
                     -------------------------------------------------------
                          Sep 30     Jun 30     Sep 30     Sep 30     Sep 30
($ millions)                2012       2012       2011       2012       2011
----------------------------------------------------------------------------
Consolidated statements of income:                                          
  Revenue              $     655  $     656  $     670  $   1,977  $   1,912
  Cost of sales and                                                         
   operating               (539)      (517)      (538)    (1,606)    (1,584)
   expenses,                                                                
   excluding                                                                
   mark-to-market                                                           
   impact of share-                                                         
   based compensation                                                       
----------------------------------------------------------------------------
                             116        139        132        371        328
Comprised of:                                                               
  Adjusted EBITDA            104        113        111        310        294
   (attributable to                                                         
   Methanex                                                                 
   shareholders)(1)                                                         
  Attributable to             12         26         21         61         34
   non-controlling                                                          
   interests                                                                
----------------------------------------------------------------------------
                             116        139        132        371        328
  Depreciation and          (47)       (44)       (44)      (130)      (113)
   amortization                                                             
  Mark-to-market               -         10         24        (8)         23
   impact of share-                                                         
   based compensation                                                       
  Louisiana project         (61)        (4)          -       (65)          -
   relocation                                                               
   expenses and                                                             
   charges                                                                  
----------------------------------------------------------------------------
  Operating income(1)          8        101        112        168        238
                                                                            
  Finance costs             (18)       (20)       (17)       (56)       (44)
  Finance income and         (3)          -        (2)        (2)          5
   other expenses                                                           
  Income tax recovery         15       (15)       (19)        (9)       (44)
   (expense)                                                                
----------------------------------------------------------------------------
  Net income           $       2  $      66  $      74  $     101  $     155
----------------------------------------------------------------------------
  Net income (loss)    $     (3)  $      52  $      62  $      72  $     137
   attributable to                                                          
   Methanex                                                                 
   shareholders                                                             
----------------------------------------------------------------------------
(1) These items are non-GAAP measures that do not have any standardized
    meaning prescribed by GAAP and therefore are unlikely to be comparable
    to similar measures presented by other companies. Refer to Additional
    Information - Supplemental Non-GAAP Measures for a description of each 
    non-GAAP measure and reconciliations to the most comparable GAAP
    measures.
(2) For the three month period ended September 30, 2012, stock options and  
    tandem share appreciation rights have been excluded from the diluted net
    income per common share (attributable to Methanex shareholders) as their
    effect would be anti-dilutive. However, for the calculation of adjusted
    diluted net income per common share (attributable to Methanex
    shareholders) these items have been included in the denominator and the
    diluted weighted average number of common shares is 95.0 million. 

 
ADJUSTED EBITDA (ATTRIBUTABLE TO METHANEX SHAREHOLDERS) 
Our operations consist of a single operating segment - the production
and sale of methanol. We review the results of operations by
analyzing changes in the components of Adjusted EBITDA. For a
discussion of the definitions used in our Adjusted EBITDA analysis,
refer to How We Analyze Our Business. 
The changes in Adjusted EBITDA resulted from changes in the
following: 


 
                                 Q3 2012           Q3 2012       YTD Q3 2012
                           compared with     compared with     compared with
($ millions)                     Q2 2012           Q3 2011       YTD Q3 2011
----------------------------------------------------------------------------
Average realized price  $           (19)  $            (6)  $             52
Sales volume                          13                 4               (8)
Total cash costs                     (3)               (5)              (28)
----------------------------------------------------------------------------
Increase (decrease) in  $            (9)  $            (7)  $             16
 Adjusted EBITDA                                                            
----------------------------------------------------------------------------
                                                                            
                                                                            
Average realized price                                                      
                                                                            
                                                               Nine Months  
                                       Three Months Ended         Ended     
                                    ----------------------------------------
                                      Sep 30  Jun 30  Sep 30  Sep 30  Sep 30
($ per tonne, except where noted)       2012    2012    2011    2012    2011
----------------------------------------------------------------------------
Methanex average non-discounted          433     452     445     440     434
 posted price(1)                                                            
Methanex average realized price          373     384     377     380     369
Average discount                         14%     15%     15%     14%     15%
----------------------------------------------------------------------------
(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.                          

 
Overall methanol market conditions have remained balanced and pricing
has been relatively stable during the periods presented (refer to
Supply/Demand Fundamentals section for more information). Our average
non-discounted posted price for the third quarter of 2012 was $433
per tonne compared with $452 per tonne for the second quarter of 2012
and $445 per tonne for the third quarter of 2011. Our average
realized price for the third quarter of 2012 was $373 per tonne
compared with $384 per tonne for the second quarter of 2012 and $377
per tonne for the third quarter of 2011. The change in average
realized price for the third quarter of 2012 decreased Adjusted
EBITDA by $19 million compared with the second quarter of 2012 and
decreased Adjusted EBITDA by $6 million compared with the third
quarter of 2011. Our average realized price for the nine months ended
September 30, 2012 was $380 per tonne compared with $369 per tonne
for the same period in 2011 and this increased Adjusted EBITDA by $52
million. 
Sales volume 
Methanol sales volumes excluding commission sales volumes were higher
in the third quarter of 2012 compared with the second quarter of 2012
by 124,000 tonnes and third quarter of 2011 by 39,000 tonnes and this
resulted in higher Adjusted EBITDA by $13 million and $4 million,
respectively. Methanol sales volumes excluding commission sales
volumes were lower for the nine month periods ended September 30,
2012 compared with the comparable period in 2011 by 91,000 tonnes and
this resulted in lower Adjusted EBITDA by $8 million. 
Total cash costs 
The primary drivers of changes in our total cash costs are changes in
the cost of methanol we produce at our facilities (Methanex-produced
methanol) and changes in the cost of methanol we purchase from others
(purchased methanol). All of our production facilities except
Medicine Hat are underpinned by natural gas purchase agreements with
pricing terms that include base and variable price components. 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 Methanex-produced and purchased
methanol costs primarily 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: 


 
                                     Q3 2012         Q3 2012     YTD Q3 2012
                               compared with   compared with   compared with
($ millions)                         Q2 2012         Q3 2011     YTD Q3 2011
----------------------------------------------------------------------------
Methanex-produced methanol  $            (5)  $          (9)  $         (31)
 costs                                                                      
Proportion of Methanex-                  (5)               8              39
 produced methanol sales                                                    
Purchased methanol costs                  10               -            (24)
Logistics costs                          (1)               -             (8)
Other, net                               (2)             (4)             (4)
----------------------------------------------------------------------------
                            $            (3)  $          (5)  $         (28)
----------------------------------------------------------------------------

 
Methanex-produced methanol costs 
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. Methanex-produced methanol costs
were higher in the third quarter of 2012 compared the second quarter
of 2012 and the third quarter of 2011 by $5 million and $9 million,
respectively, primarily due to a change in the mix of production sold
from inventory. For the nine month period ended September 30, 2012
compared with the same period in 2011, Methanex-produced methanol
costs were higher by $31 million, primarily due to the impact of
higher methanol pricing on natural gas costs and due to a change in
the mix of production sold from inventory. 
Proportion of Methanex-produced methanol sales 
The cost of purchased methanol is directly linked to the selling
price for methanol at the time of purchase and the cost of purchased
methanol is generally higher than the cost of Methanex-produced
methanol. Accordingly, an increase in the proportion of
Methanex-produced methanol sales results in a decrease in our overall
cost structure for a given period. For the third quarter of 2012
compared with the second quarter of 2012, a lower proportion of
Methanex-produced methanol sales decreased Adjusted EBITDA by $5
million. For the third quarter of 2012 compared with the same period
in 2011, Methanex-produced methanol sales were higher primarily due
to the impact of higher sales of New Zealand production and this
increased Adjusted EBITDA by $8 million. 
For the nine month period ended September 30, 2012 compared with the
same period in 2011, a higher proportion of Methanex-produced
methanol sales increased Adjusted EBITDA by $39 million. The impact
of higher sales volumes from the Egypt and Medicine Hat methanol
facilities, which commenced operations in the first half of 2011,
were partially offset by lower sales volumes from the Chile and Atlas
methanol facilities in 2012. 
Purchased methanol costs  
Changes in purchased methanol costs for all periods presented are
primarily as a result of changes in methanol pricing. 
Logistics costs 
For the nine month period ended September 30, 2012 compared with the
same period in 2011, the logistics cost variance was impacted by a
one-time $7 million charge in the first quarter of 2012 to terminate
a time charter vessel lease contract. 
Other, net 
Other costs were higher for all periods presented due to a portion of
fixed manufacturing costs being charged directly to earnings rather
than to inventory due to lower production at our Chile and Egypt
facilities. 
Mark-to-Market Impact of 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 all the
share-based awards, share-based compensation is recognized over the
related vesting period for the proportion of the service that has
been rendered at each reporting date. Share-based compensation
includes an amount related to the grant-date value and a
mark-to-market impact as a result of subsequent changes in the
Company's share price. The grant-date value amount is included in
Adjusted EBITDA and Adjusted net income. The mark-to-market impact of
share-based compensation as a result of changes in our share price is
excluded from Adjusted EBITDA and Adjusted net income and analyzed
separately below. 


 
                             Three Months Ended          Nine Months Ended  
                     -------------------------------------------------------
                          Sep 30     Jun 30     Sep 30     Sep 30     Sep 30
                            2012       2012       2011       2012       2011
----------------------------------------------------------------------------
Methanex Corporation   $   28.54  $   27.84  $   20.84  $   28.54  $   20.84
 share price(1)                                                             
Grant-date fair value  $       3  $       7  $       3  $      17  $      14
 expense included in                                                        
 Adjusted                                                                   
EBITDA and Adjusted                                                         
 net income                                                                 
Mark-to-market impact          -       (10)       (24)          8       (23)
 due to change in                                                           
 share price                                                                
----------------------------------------------------------------------------
Total share-based      $       3  $     (3)  $    (21)  $      25  $     (9)
 compensation expense                                                       
 (recovery)                                                                 
----------------------------------------------------------------------------
(1) US dollar share price of Methanex Corporation as quoted on NASDAQ Global
    Market on the last trading day of the respective period.                

 
Share appreciation rights (SARs) and tandem share appreciation rights
(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. The fair value of SARs and TSARs are
re-measured each quarter using the Black-Scholes option pricing
model, which considers the market value of the Company's common
shares on the last trading day of the quarter. 
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. For deferred, restricted and
performance share units, the value is initially measured at the grant
date and subsequently re-measured based on the market value of the
Company's common shares on the last trading day of each quarter. 
Louisiana Project Relocation Expenses and Charges 
In July 2012, we reached a final investment decision to proceed with
the project to relocate an idle Chile facility to Geismar, Louisiana
with an estimated project cost of approximately $550 million. The
project will add one million tonnes of annual production capacity and
is expected to be operational by the end of 2014. We have commenced
dismantling of the plant and expect to receive all key permits by the
end of 2012. Under IFRS, certain costs associated with relocating an
asset are not eligible for capitalization and are required to be
charged directly to earnings. During the second and third quarters of
2012, we recorded cash expenses to earnings of $4 million ($2 million
after tax) and $35 million ($21 million after-tax), respectively, of
Louisiana project relocation expenses. In addition, in association
with this decision, a non-cash $26 million ($18 million after-tax)
charge was recorded to earnings in the third quarter of 2012 related
to the carrying value of the Chile II facility that is being
relocated to Louisiana. 
Depreciation and Amortization 
Depreciation and amortization was $47 million for the third quarter
of 2012 compared with $44 million for the second quarter of 2012 and
$44 million for the third quarter of 2011. Depreciation and
amortization was higher in the third quarter of 2012 compared with
the second quarter of 2012 and third quarter of 2011 primarily due to
higher sales of Methanex-produced methanol and as a result of a
higher proportion of depreciation being charged directly to earnings
rather than to inventory due to lower production from our Egypt and
Chile facilities. Depreciation and amortization was $130 million for
the nine month period ended September 30, 2012 compared with $113
million for the same period in 2011. The increase in depreciation and
amortization in 2012 compared with 2011 is primarily a result of
depreciation associated with the Egypt (100% basis) and Medicine Hat
methanol facilities which commenced operations in the first and
second quarters of 2011, respectively. 


 
Finance Costs                                                               
                                                                            
                             Three Months Ended          Nine Months Ended  
                     -------------------------------------------------------
                          Sep 30     Jun 30     Sep 30     Sep 30     Sep 30
($ millions)                2012       2012       2011       2012       2011
----------------------------------------------------------------------------
Finance costs before   $      19  $      20  $      17  $      57  $      51
 capitalized interest                                                       
Less capitalized             (1)          -          -        (1)        (7)
 interest                                                                   
----------------------------------------------------------------------------
Finance costs          $      18  $      20  $      17  $      56  $      44
----------------------------------------------------------------------------

 
Finance costs before capitalized interest for the third quarter of
2012 were $19 million compared with $20 million for the second
quarter of 2012 and $17 million for the third quarter of 2011.
Finance costs before capitalized interest for the nine month period
ended September 30, 2012 were $57 million compared with $51 million
for the same period in 2011. The change in finance costs for all
periods presented is primarily due to the impact of interest expense
on the $250 million of unsecured notes issued by the Company in late
February 2012. The unsecured notes bear an interest rate of 5.25% and
mature in 2022. In August 2012, we repaid $200 million of unsecured
notes bearing an interest rate of 8.75%. 
Capitalized interest in 2011 relates to interest costs capitalized
during the construction of the 1.26 million tonne per year methanol
facility in Egypt (100% basis) which commenced operations in March
2011. Capitalized interest in the third quarter of 2012 relates to
interest costs capitalized for the Louisiana Project. 


 
Finance Income and                                                          
 Other Expenses                                                             
                                                                            
                             Three Months Ended          Nine Months Ended  
                     -------------------------------------------------------
                          Sep 30     Jun 30     Sep 30     Sep 30     Sep 30
($ millions)                2012       2012       2011       2012       2011
----------------------------------------------------------------------------
Finance income and     $     (3)  $       -  $     (2)  $     (2)  $       5
 other expenses                                                             
----------------------------------------------------------------------------

 
The change in finance income and other expenses for all periods
presented was primarily due to the impact of changes in foreign
exchange rates. 
Income Taxes 
A summary of our income taxes for the third quarter of 2012 is as
follows: 


 
                                                                Three Months
                                                                       Ended
                           Three Months Ended Sep 30 2012        Jun 30 2012
          ------------------------------------------------------------------
              Amounts excluding                                             
                      Louisiana    Louisiana Project                        
             Project Relocation           Relocation                        
                   Expenses and         Expenses and                        
($ millions)            Charges              Charges       Total       Total
----------------------------------------------------------------------------
 
Profit      $              47.5  $            (60.9)  $   (13.4)  $     80.8
 (loss)                                                                     
 before                                                                     
 income                                                                     
 tax                                                                        
 expense                                                                    
Income tax                (7.3)                 22.1        14.8      (14.6)
 recovery                                                                   
 (expense)                                                                  
----------------------------------------------------------------------------
Net income  $              40.2  $            (38.8)  $      1.4  $     66.2
 (loss)                                                                     
----------------------------------------------------------------------------
Effective                   15%                  36%        110%         18%
 tax rate                                                                   
----------------------------------------------------------------------------

 
Excluding income taxes related to Louisiana project relocation
expenses and charges, the effective tax rate for the third quarter of
2012 was 15% compared with 18% for the second quarter of 2012. 
We earn the majority of our pre-tax earnings in Trinidad, Egypt,
Chile, Canada and New Zealand. In Trinidad and Chile, the statutory
tax rate is 35% and in Egypt, the statutory tax rate is 25%. Our
Atlas facility in Trinidad has partial relief from corporation income
tax until 2014. We have significant loss carryforwards in Canada and
New Zealand which have not been recognized for accounting purposes.
During the third quarter of 2012, we earned a higher proportion of
our consolidated income from methanol produced in jurisdictions with
low effective tax rates and this contributed to a lower effective tax
rate compared with the second quarter of 2012. 
SUPPLY/DEMAND FUNDAMENTALS 
We estimate that methanol demand, excluding methanol demand from
integrated methanol to olefins facilities, is currently approximately
51 million tonnes on an annualized basis. 
Traditional chemical derivatives consume about two-thirds of global
methanol demand and growth is correlated to industrial production.
Demand for methanol in traditional chemical derivatives has remained
relatively stable. 
Energy-related applications consume about one third of global
methanol demand and over the last few years high oil prices have
driven strong demand growth for methanol into energy applications
such as gasoline blending and DME, primarily in China. Growth of
methanol blending into gasoline in China has been particularly strong
and we believe that future growth in this application is supported by
regulatory changes in that country. Many provinces in China have
implemented fuel blending standards, and China also has national
standards in place for methanol fuel blending (M85 & M100, or 85%
methanol and 100% methanol, respectively). Methanol demand into
olefins ("MTO") is emerging as a significant methanol derivative. In
China, there are three integrated and one merchant MTOplants in
production and there is a second merchant plant expected to commence
operation by the end of this year which could consume up to 1.8
million tonnes of methanol. We believe demand potential into
energy-related applications and olefins production will continue to
grow. 


 
                                                                            
                                                                            
Methanex Non-Discounted Regional Posted Prices(1)                           
                                                 Oct     Sep     Aug    July
(US$ per tonne)                                 2012    2012    2012    2012
----------------------------------------------------------------------------
United States                                    439     439     439     439
Europe(2)                                        437     423     423     423
Asia                                             435     425     425     440
----------------------------------------------------------------------------
(1) Discounts from our posted prices are offered to customers based on
    various factors.                                                        
(2) EUR340 for Q3 2012 (Q2 2012 - EUR340) converted to United States
    dollars. 

 
During the third quarter of 2012, market conditions and the pricing
environment were relatively stable and our average non-discounted
price was $433 per tonne. Entering the fourth quarter, as a result of
steady demand and planned and unplanned industry outages, there has
been upward pressure on spot pricing and we recently announced our
North American non-discounted price for November at $482 per tonne,
which is up $43 per tonne from October. 
In Q3 2012, we restarted an idle plant in New Zealand that added 0.65
million tonnes of annual production capacity and production commenced
at a 0.85 million tonne plant in Beaumont, Texas. We have secured an
offtake for a substantial quantity of production from the Beaumont
facility. 
Over the next few years, there is a modest level of new capacity
expected to come on-stream relative to demand growth expectations.
There is a 0.8 million tonne plant expected to restart in
Channelview, Texas in late 2013 and a 0.7 million tonne plant
expected to start up in Azerbaijan in 2013. We are assessing the
feasibility of initiatives which could increase annual production
capacity by up to 900,000 tonnes in New Zealand and by up to 90,000
tonnes in Medicine Hat, Alberta by the end of 2013. We are also
relocating an idle Chile facility to Geismar, Louisiana, which is on
track to add one million tonnes of annual production capacity by the
end of 2014. 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 
Cash flows from operating activities 
Cash flows from operating activities in the third quarter of 2012
were $131 million compared with $135 million for the second quarter
of 2012 and $119 million for the third quarter of 2011. Cash flows
from operating activities for the nine month period ended September
30, 2012 were $360 million compared with $321 million for the same
period in 2011. 
The changes in cash flows from operating activities resulted from
changes in the following: 


 
                                 Q3 2012           Q3 2012       YTD Q3 2012
                           compared with     compared with     compared with
($ millions)                     Q2 2012           Q3 2011       YTD Q3 2011
----------------------------------------------------------------------------
 
Adjusted EBITDA         $            (9)  $            (7)  $             16
 (attributable to                                                           
 Methanex                                                                   
 shareholders)                                                              
Cash flows from                     (14)               (9)                26
 operating activities                                                       
 attributable to non-                                                       
 controlling interests                                                      
Changes in non-cash                   49                57                20
 working capital                                                            
Income taxes paid                      -                 1                17
Cash portion of                     (31)              (35)              (39)
 Louisiana project                                                          
 relocation expenses                                                        
 and charges                                                                
Other                                  1                 5               (1)
----------------------------------------------------------------------------
Increase (decrease) in  $            (4)  $             12  $             39
 cash flows from                                                            
 operating activities                                                       
----------------------------------------------------------------------------

 
Adjusted cash flows from operating activities 
Adjusted cash flows from operating activities, which excludes the
amounts associated with the 40% non-controlling interests in the
methanol facility in Egypt, changes in non-cash working capital, and
the cash portion of Louisiana project relocation expenses and charges
were $103 million in the third quarter of 2012 compared with $110
million for the second quarter of 2012 and $104 million for the third
quarter of 2011. Adjusted cash flows from operating activities for
the nine month period ended September 30, 2012 were $301 million
compared with $270 million for the same period in 2011. 
The changes in adjusted cash flows from operating activities resulted
from changes in the following: 


 
                                 Q3 2012           Q3 2012       YTD Q3 2012
                           compared with     compared with     compared with
($ millions)                     Q2 2012           Q3 2011       YTD Q3 2011
----------------------------------------------------------------------------
 
Adjusted EBITDA         $            (9)  $            (7)  $             16
 (attributable to                                                           
 Methanex                                                                   
 shareholders)                                                              
Income taxes paid                      -                 1                17
Other                                  2                 5               (2)
----------------------------------------------------------------------------
Increase (decrease) in  $            (7)  $            (1)  $             31
 adjusted cash flows                                                        
 from operating                                                             
 activities                                                                 
----------------------------------------------------------------------------

 
Refer to the Additional Information - Supplemental Non-GAAP Measures
section for a reconciliation of Adjusted cash flows from operating
activities to the most comparable GAAP measure. 
During the third quarter of 2012, we paid a quarterly dividend of
$0.185 per share, or $17 million. 
We operate in a highly competitive commodity industry and believe it
is appropriate to maintain a conservative balance sheet and to
maintain financial flexibility. During the third quarter of 2012, we
repaid $200 million of unsecured notes and our cash balance at
September 30, 2012 was $403 million, including $30 million related to
the non-controlling interest in Egypt. 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. We have
a strong balance sheet and an undrawn $200 million credit facility
provided by highly rated financial institutions that expires in
mid-2015. 
Our planned capital maintenance expenditure program directed towards
maintenance, turnarounds and catalyst changes for existing operations
is currently estimated to total approximately $140 million to the end
of 2013, including major refurbishments at some of our plants. In
July 2012, we reached a final investment decision to proceed with the
project to relocate an idle Chile facility to Geismar, Louisiana with
estimated project costs of approximately $550 million. The plant is
expected to be operational by the end of 2014. We are also
considering other projects in New Zealand and Medicine Hat which, if
approved, would result in an additional $160 million of capital
expenditures by the end of 2013. We believe that we have the capacity
to fund these growth initiatives with cash on hand, cash generated
from operations, the undrawn bank facility and access to debt capital
markets. 
We believe we are well positioned to meet our financial commitments,
invest to grow the Company and continue to deliver on our commitment
to return excess cash to shareholders. 
SHORT-TERM OUTLOOK 
Entering the fourth quarter 2012, there is upward pressure on
methanol prices as a result of steady demand and planned and
unplanned industry outages. We recently announced our North American
non-discounted price for November at $482 per tonne, which is up $43
per tonne from October. 
The methanol price will ultimately depend on the strength of the
global economy, industry operating rates, global energy prices, new
supply additions 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 September 30, 2012, no changes were made
in our internal control over financial reporting that have materially
affected, or are reasonably likely to materially affect, our internal
control over financial reporting. 
ANTICIPATED CHANGES TO INTERNATIONAL FINANCIAL REPORTING STANDARDS
(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 consolidation accounting so that 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 will result in a significant presentation
impact. We currently account for our 63.1% interest in Atlas Methanol
Company using proportionate consolidation accounting and upon
adoption of these new standards effective January 1, 2013 we will
account for this entity using equity accounting. 
ADDITIONAL INFORMATION - SUPPLEMENTAL NON-GAAP MEASURES 
In addition to providing measures prepared in accordance with
International Financial Reporting Standards (IFRS), we present
certain supplemental non-GAAP measures. These are Adjusted EBITDA,
Adjusted net income, Adjusted diluted net income per common share,
operating income and Adjusted cash flows from operating activities.
These measures do not have any standardized meaning prescribed by
generally accepted accounting principles (GAAP) and therefore are
unlikely to be comparable to similar measures presented by other
companies. These supplemental non-GAAP measures are provided to
assist readers in determining our ability to generate cash from
operations and improve the comparability of our results from one
period to another. 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. 
Adjusted EBITDA (attributable to Methanex shareholders) 
Adjusted EBITDA differs from the most comparable GAAP measure, net
income attributable to Methanex shareholders, because it excludes
finance costs, finance income and other expenses, income tax expense
(recovery), depreciation and amortization, mark-to-market impact of
share-based compensation and Louisiana project relocation expenses
and charges. 
Adjusted EBITDA and Adjusted net income exclude the mark-to-market
impact of share-based compensation related to the impact of changes
in our share price on share appreciation rights, tandem share
appreciation rights, deferred share units, restricted share units and
performance share units. The mark-to-market impact related to
performance share units that is excluded from Adjusted EBITDA and
Adjusted net income is calculated as the difference between the grant
date value determined using a Methanex total shareholder return
factor of 100% and the fair value recorded at each period end. As
share-based awards will be settled in future periods, the ultimate
value of the units is unknown at the date of grant and therefore the
grant date value recognized in Adjusted EBITDA and Adjusted net
income may differ from the total settlement cost. 
The following table shows a reconciliation from net income (loss)
attributable to Methanex shareholders to Adjusted EBITDA: 


 
                      Three Months Ended               Nine Months Ended    
           -----------------------------------------------------------------
                  Sep 30       Jun 30       Sep 30       Sep 30       Sep 30
($ thousands)       2012         2012         2011         2012         2011
----------------------------------------------------------------------------
Net income   $   (2,571)  $    52,238  $    62,316  $    71,748  $   137,455
 (loss)                                                                     
 attributable                                                               
  to                                                                      
 Methanex                                                                   
 shareholders                                                               
  Finance         17,764       20,137       17,386       56,434       43,929
   costs                                                                    
  Finance          3,398          293        1,585        2,012      (4,558)
   income                                                                   
   and                                                                      
   other                                                                    
   expenses                                                                 
  Income        (14,817)       14,637       18,838        9,498       43,731
   tax                                                                      
   expense                                                                  
   (recovery)                                                               
  Depreciation    47,689       44,436       43,696      130,092      113,109
   and                                                                  
   amortization                                                             
  Mark-to-             -     (10,639)     (23,743)        7,528     (22,445)
   market                                                                   
   impact                                                                   
   of                                                                       
   share-                                                                   
   based                                                                    
   compensation                                                             
  Louisiana       60,857        3,686            -       64,543            -
   project                                                                  
   relocation                                                               
   expenses                                                                 
   and                                                                      
   charges                                                                  
  Non-           (8,447)     (12,015)      (8,992)     (31,992)     (16,886)
   controlling                                                              
   interests                                                                
   adjustment(1)                                                            
----------------------------------------------------------------------------
Adjusted     $   103,873  $   112,773  $   111,086  $   309,863  $   294,335
 EBITDA                                                                     
 (attributable                                                              
 to                                                                     
 Methanex                                                                   
 shareholders)                                                              
----------------------------------------------------------------------------
(1) This adjustment represents finance costs, finance income and other     
    expenses, income tax expense, and depreciation and amortization
    associated with the 40% non-controlling interest in the methanol
    facility in Egypt.   

 
Adjusted Net Income and Adjusted Diluted Net Income per Common Share 
Adjusted net income and Adjusted diluted net income per common share
are non-GAAP measures because they exclude the mark-to-market impact
of share-based compensation and items that are considered by
management to be non- operational. The following table shows a
reconciliation of net income (loss) attributable to Methanex
shareholders to Adjusted net income and the calculation of Adjusted
diluted net income per common share: 


 
($ thousands
 except number           Three Months Ended             Nine Months Ended   
 of shares and  ------------------------------------------------------------
 per share            Sep 30      Jun 30      Sep 30      Sep 30      Sep 30
 amounts)               2012        2012        2011        2012        2011
----------------------------------------------------------------------------
Net income        $  (2,571)  $   52,238  $   62,316  $   71,748  $  137,455
 (loss)                                                                     
 attributable to                                                            
 Methanex                                                                   
 shareholders                                                               
  Mark-to-market           -    (10,639)    (23,743)       7,528    (22,445)
   impact of                                                                
   share-based                                                              
   compensation                                                             
  Louisiana                                                                 
   project                                                                  
   relocation                                                               
   expenses and                                                             
   charges                                                                  
    Cash expense      35,169       3,686           -      38,855           -
    Non-cash          25,688           -           -      25,688           -
     charge                                                                 
  Income tax        (22,146)       (932)       1,924    (24,546)       1,830
   expense                                                                  
   (recovery)                                                               
   related to                                                               
   above items                                                              
----------------------------------------------------------------------------
Adjusted net      $   36,140  $   44,353  $   40,497  $  119,273  $  116,840
 income                                                                     
----------------------------------------------------------------------------
Diluted weighted        93.9        95.1        94.4        94.9        94.4
 average shares                                                             
 outstanding                                                            
Adjusted diluted  $     0.38  $     0.47  $     0.43  $     1.26  $     1.24
 net income per                                                             
 common share(1)                                                            
----------------------------------------------------------------------------
(1) For the three month period ended September 30, 2012, stock options and  
    tandem share appreciation rights have been excluded from the diluted net
    income per common share (attributable to Methanex shareholders) as their
    effect would be anti-dilutive. However, for the calculation of adjusted
    diluted net income per common share (attributable to Methanex
    shareholders) these items have been included in the denominator and the
    diluted weighted average number of common shares is 95.0 million. 

 
Adjusted Cash Flows from Operating Activities (attributable to
Methanex shareholders) 
Adjusted cash flows from operating activities differs from the most
comparable GAAP measure, cash flows from operating activities,
because it does not include cash flows associated with the 40%
non-controlling interest in the methanol facility in Egypt, changes
in non-cash working capital and the cash portion of Louisiana project
relocation expenses and charges. 
The following table shows a reconciliation of cash flows from
operating activities to adjusted cash flows from operating
activities: 


 
                      Three Months Ended               Nine Months Ended    
           -----------------------------------------------------------------
                  Sep 30       Jun 30       Sep 30       Sep 30       Sep 30
($ thousands)       2012         2012         2011         2012         2011
----------------------------------------------------------------------------
Cash flows   $   131,253  $   135,232  $   119,119  $   359,885  $   321,273
 from                                                                       
 operating                                                                  
 activities  
Add                                                                         
 (deduct)                                                                   
 non-                                                                       
 controlling                                                                
 interest                                                                 
 adjustment:                                                                
  Net            (4,016)     (13,907)     (12,281)     (28,653)     (17,425)
   income
  Non-cash       (8,477)     (12,015)      (8,992)     (31,992)     (16,886)
   items
Changes in      (51,392)      (2,679)        5,722     (36,647)     (16,537)
 non-cash                                                                  
 working                                                                    
 capital
Cash              35,169        3,686            -       38,855            -
 portion of                                                                 
 Louisiana                                                                  
 project                                                                    
 relocation                                                                 
 expensesan                                                                 
 d charges                                                                  
           -----------------------------------------------------------------
Adjusted     $   102,537  $   110,317  $   103,568  $   301,448  $   270,425
 cash flows                                                                 
 from                                                                       
 operating                                                                  
 activities                                                                 
 (attributable                                                             
 to                                                                      
 Methanex                                                                   
 shareholders)                                                              
----------------------------------------------------------------------------

 
Operating Income 
Operating income is reconciled directly to a GAAP measure in our
consolidated statements of income. 
QUARTERLY FINANCIAL DATA (UNAUDITED) 
A summary of selected financial information for the prior eight
quarters is as follows:  


 
                                                                            
                                         Three Months Ended                 
                        ----------------------------------------------------
($ thousands, except per       Sep 30       Jun 30       Mar 31       Dec 31
 share amounts)                  2012         2012         2012         2011
----------------------------------------------------------------------------
Revenue                   $   655,330  $   656,103  $   665,867  $   696,499
Net income (loss)(1)          (2,571)       52,238       22,081       63,871
Adjusted net income(1,2)       36,140       44,353       38,780       64,987
Basic net income (loss)        (0.03)         0.56         0.24         0.69
 per common share(1)                                                        
Diluted net income             (0.03)         0.50         0.23         0.68
 (loss) per common                                                          
 share(1)                                                                   
Adjusted diluted net             0.38         0.47         0.41         0.69
 income per share(1,2)                                                      
----------------------------------------------------------------------------
                                                                            
                                           Three Months Ended               
                        ----------------------------------------------------
($ thousands, except per       Sep 30       Jun 30       Mar 31       Dec 31
 share amounts)                  2011         2011         2011         2010
----------------------------------------------------------------------------
Revenue                   $   669,702  $   622,829  $   619,007  $   570,337
Net income(1)                  62,316       40,529       34,610       25,508
Adjusted net income(1,2)       40,497       39,223       37,120       39,448
Basic net income per             0.67         0.44         0.37         0.28
 common share(1)                                                            
Diluted net income per           0.59         0.43         0.37         0.27
 common share(1)                                                            
Adjusted diluted net             0.43         0.41         0.39         0.42
 income per share(1,2)                                                      
----------------------------------------------------------------------------
(1) Attributable to Methanex Corporation shareholders.                      
(2) These items are non-GAAP measures that do not have any standardized
    meaning prescribed by GAAP and therefore are unlikely to be comparable
    to similar measures presented by other companies. Refer to Additional
    Information - Supplemental Non-GAAP Measures for a description of each
    non-GAAP measure and reconciliations to the most comparable GAAP
    measures.           

 
FORWARD-LOOKING INFORMATION WARNING 
This Third Quarter 2012 Management's Discussion and Analysis ("MD&A")
as well as comments made during the Third Quarter 2012 investor
conference call contain forward-looking statements with respect to us
and our industry. These statements relate to future events or our
future performance. All statements other than statements of
historical fact are forward-looking statements. Statements that
include the words "believes", "expects", "may", "will", "potential",
"estimates", "target", "interest", "planning" 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 shutdowns (either temporary or permanent) or restarts of
    existing methanol supply (including our own facilities), including,
    without limitation, the timing and length of planned maintenance
    outages, 
--  expected methanol and energy prices, 
--  expected levels of methanol purchases from traders or other third
    parties, 
--  expected levels, timing and availability of economically-priced natural
    gas supply to each of our plants, 
--  commitments, capital or otherwise of third parties to future natural gas
    exploration and development in the vicinity of our plants, 
--  expected capital expenditures, including, without limitation, those to
    support natural gas exploration and development for our plants and the
    restart of our idled methanol facilities, 
--  anticipated production rates of our plants, 
--  expected operating costs, including natural gas feedstock costs and
    logistics costs, 
--  expected tax rates or resolutions to tax disputes, 
--  expected cash flows, earnings capability and share price,
--  ability to meet covenants or obtain waivers associated with our long-
    term debt obligations, including, without limitation, the Egypt limited
    recourse debt facilities that have conditions associated with
    finalization of certain land title registration and related mortgages
    that require action 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, plant
    restarts, capacity expansions, plant relocations or other business
    initiatives or opportunities, including the planned relocation of one of
    our idle Chile methanol plants to Louisiana and certain initiatives in
    New Zealand,
--  financial strength and ability to meet future financial commitments,
--  expected global or regional economic activity (including industrial
    production levels),
--  expected outcomes of litigation or other disputes, claims and
    assessments,
--  expected actions of governments, government agencies, gas suppliers,
    courts, tribunals or other third parties, and
--  expected impact on our operations in Egypt or 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, Canada and the United States, 
--  production rates of our facilities,
--  receipt of permits in connection with the Louisiana relocation project, 
--  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, 
--  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, 
--  timing of completion and cost of our Louisiana relocation project, 
--  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, 
--  absence of material negative impact from political instability in the
    countries in which we operate, and 
--  enforcement of contractual arrangements and ability to perform
    contractual obligations by customers, gas and other 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 on commercially acceptable terms, 
--  the ability to successfully carry out corporate initiatives and
    strategies, 
--  actions of competitors, suppliers and financial institutions, 
--  conditions within the natural gas delivery systems that may prevent
    delivery of our natural gas supply requirements,
--  competing demand for natural gas, especially with respect to residential
    needs of citizens in Chile and Egypt, 
--  actions of governments and governmental authorities, including without
    limitation, the 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 2011 Management's Discussion and Analysis
    and this Third Quarter 2012 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 Adjusted EBITDA (refer to the
Additional Information - Supplemental Non-GAAP Measures section for a
description of each non-GAAP measure and reconciliations to the most
comparable GAAP measures). 
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 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 revenue. 
CASH COST  
The change in Adjusted EBITDA as a result of changes in cash costs is
calculated as the difference from period to period in cash costs per
tonne multiplied by the current period total methanol sales volume
excluding commission sales volume in the current period. The cash
costs per tonne is the weighted average of the cash cost per tonne of
Methanex-produced methanol and the cash cost per tonne of purchased
methanol. The cash cost per tonne of Methanex-produced methanol
includes absorbed fixed cash costs per tonne and variable cash costs
per tonne. The cash cost per tonne of purchased methanol consists
principally of the cost of methanol itself. In addition, the change
in 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% of its production through a commission offtake agreement. We
account for this investment using proportionate consolidation, which
results in 63.1% of its results being included in revenues and
expenses 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% of its production 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 business, Adjusted EBITDA,
Adjusted net income and Adjusted cash flows from operating activities
exclude the amounts associated with the other investors' 40%
non-controlling interests, which are included 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               Nine Months Ended       
            --------------------------------  ------------------------------
                      Sep 30          Sep 30          Sep 30          Sep 30
                        2012            2011            2012            2011
----------------------------------------------------------------------------
Revenue       $      655,330  $      669,702  $    1,977,300  $    1,911,538
Cost of            (538,994)       (513,600)     (1,614,320)     (1,560,447)
 sales and                                                                  
 operating                                                                  
 expenses                                                                   
Depreciation        (47,689)        (43,696)       (130,092)       (113,109)
 and                                                                        
 amortization                                                               
Louisiana           (60,857)               -        (64,543)               -
 project                                                                    
 relocation                                                                 
 expenses                                                                   
 and charges                                                                
 (note 3)                                                                   
----------------------------------------------------------------------------
Operating              7,790         112,406         168,345         237,982
 income                                                                     
Finance             (17,764)        (17,386)        (56,434)        (43,929)
 costs (note 5)                                                            
Finance              (3,398)         (1,585)         (2,012)           4,558
 income and                                                                 
 other                                                                      
 expenses                                                                   
----------------------------------------------------------------------------
Profit              (13,372)          93,435         109,899         198,611
 (loss)                                                                     
 before                                                                     
 income tax                                                                 
 expense                                                                    
Income tax                                                                  
 recovery                                                                   
 (expense):                                                                 
  Current            (6,844)        (10,802)        (22,001)        (27,344)
  Deferred            21,661         (8,036)          12,503        (16,387)
----------------------------------------------------------------------------
                      14,817        (18,838)         (9,498)        (43,731)
----------------------------------------------------------------------------
Net income    $        1,445  $       74,597  $      100,401  $      154,880
 (loss)                                                                     
----------------------------------------------------------------------------
Attributable                                                                
 to:                                                                        
  Methanex           (2,571)          62,316          71,748         137,455
   Corporation                                                              
   shareholders                                                            
  Non-                 4,016          12,281          28,653          17,425
   controlling                                                              
   interests                                                                
----------------------------------------------------------------------------
              $        1,445  $       74,597  $      100,401  $      154,880
----------------------------------------------------------------------------
                                                                            
Income                                                                      
 (loss) for                                                                 
 the period                                                                 
 attributable                                                               
 to                                                                       
 Methanex                                                                   
 Corporation                                                                
 shareholders                                                               
  Basic net   $       (0.03)  $         0.67  $         0.77  $         1.48
   income                                                                   
   (loss)                                                                   
   per                                                                      
   common                                                                   
   share                                                                    
   (note 6)                                                                 
  Diluted     $       (0.03)  $         0.59  $         0.76  $         1.38
   net                                                                      
   income                                                                   
   (loss)                                                                   
   per                                                                      
   common                                                                   
   share                                                                    
   (note 6)                                                                 
                                                                            
Weighted          93,880,221      93,202,401      93,691,597      92,954,844
 average                                                                    
 number of                                                                  
 common                                                                     
 shares                                                                     
 outstanding                                                                
Diluted           93,880,221      94,441,681      94,887,279      94,404,262
 weighted                                                                   
 average                                                                    
 number of                                                                  
 common                                                                     
 shares                                                                     
 outstanding                                                                

 
See accompanying notes to condensed consolidated interim financial
statements.                                                


 
Methanex Corporation                                                        
Consolidated Statements of Comprehensive Income (unaudited)                 
(thousands of U.S. dollars, except number of common shares and per share    
 amounts)                                                                   
                                                                            
                                                                            
                                                                            
                                  Three Months Ended     Nine Months Ended  
                                ----------------------  --------------------
                                     Sep 30     Sep 30     Sep 30     Sep 30
                                       2012       2011       2012       2011
----------------------------------------------------------------------------
Net income                        $   1,445  $  74,597  $ 100,401  $ 154,880
  Other comprehensive income                                                
   (loss):                                                                  
    Change in fair value of             528        634      (343)       (35)
     forward exchange contracts,                                            
     net of tax                                                             
    Change in fair value of         (1,744)      4,103    (5,104)    (3,607)
     interest rate swap                                                     
     contracts, net of tax                                                  
    Realized loss on interest         2,719      7,951      8,421      8,821
     rate swap contracts                                                    
     reclassified to interest                                               
     expense, net of tax                                                    
    Realized loss on interest             -          -          -      7,279
     rate swap contracts                                                    
     reclassified to property,                                              
     plant and equipment                                                    
----------------------------------------------------------------------------
                                      1,503     12,688      2,974     12,458
----------------------------------------------------------------------------
Comprehensive income (loss)       $   2,948  $  87,285  $ 103,375  $ 167,338
----------------------------------------------------------------------------
Attributable to:                                                            
  Methanex Corporation              (1,458)     70,183     73,395    144,916
   shareholders                                                             
  Non-controlling interests           4,406     17,102     29,980     22,422
----------------------------------------------------------------------------
                                  $   2,948  $  87,285  $ 103,375  $ 167,338
----------------------------------------------------------------------------

 
See accompanying notes to condensed consolidated interim financial
statements.  


 
Methanex Corporation                                                        
Consolidated Statements of Financial Position(unaudited)                    
(thousands of U.S. dollars)                                                 
                                                                            
                                                        Sep 30        Dec 31
AS AT                                                     2012          2011
----------------------------------------------------------------------------
                                                                            
ASSETS                                                                      
Current assets:                                                             
  Cash and cash equivalents                       $    403,065  $    350,711
  Trade and other receivables                          399,099       378,430
  Inventories (note 2)                                 223,319       281,015
  Prepaid expenses                                      28,571        24,465
----------------------------------------------------------------------------
                                                     1,054,054     1,034,621
Non-current assets:                                                         
  Property, plant and equipment (note 3)             2,227,715     2,233,023
  Other assets                                         127,763       125,931
----------------------------------------------------------------------------
                                                     2,355,478     2,358,954
----------------------------------------------------------------------------
                                                  $  3,409,532  $  3,393,575
----------------------------------------------------------------------------
                                                                            
LIABILITIES AND EQUITY                                                      
Current liabilities:                                                        
  Trade, other payables and accrued liabilities   $    307,041  $    327,130
  Current maturities on long-term debt (note 4)         53,334       251,107
  Current maturities on finance leases                   7,198         6,713
  Current maturities on other long-term                 18,668        18,031
   liabilities                                                              
----------------------------------------------------------------------------
                                                       386,241       602,981
Non-current liabilities:                                                    
  Long-term debt (note 4)                              855,518       652,148
  Finance leases                                        50,508        55,979
  Other long-term liabilities                          197,771       178,172
  Deferred income tax liabilities                      292,266       302,332
----------------------------------------------------------------------------
                                                     1,396,063     1,188,631
Equity:                                                                     
  Capital stock                                        473,860       455,434
  Contributed surplus                                   17,686        22,281
  Retained earnings                                    964,077       942,978
  Accumulated other comprehensive loss                (14,321)      (15,968)
----------------------------------------------------------------------------
  Shareholders' equity                               1,441,302     1,404,725
  Non-controlling interests                            185,926       197,238
----------------------------------------------------------------------------
  Total equity                                       1,627,228     1,601,963
----------------------------------------------------------------------------
                                                  $  3,409,532  $  3,393,575
----------------------------------------------------------------------------

 
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)                 
                                                                            
                                                                            
                                                                            
                                                                Accumulated 
                    Number of                                         Other 
                       Common   Capital Contributed  Retained Comprehensive 
                       Shares     Stock     Surplus  Earnings          Loss 
----------------------------------------------------------------------------
Balance, December                                                           
 31, 2010          92,632,022 $ 440,092 $    25,393  $813,819  $    (26,093)
  Net income                -         -           -   137,455             - 
  Other                                                                     
   comprehensive                                                            
   income                   -         -           -         -         7,461 
  Compensation                                                              
   expense                                                                  
   recorded for                                                             
   stock options            -         -         657         -             - 
  Issue of shares                                                           
   on exercise of                                                           
   stock options      585,798    11,023           -         -             - 
  Reclassification                                                          
   of grant date                                                            
   fair value on                                                            
   exercise of                                                              
   stock options            -     3,819      (3,819)        -             - 
  Dividend                                                                  
   payments to                                                              
   Methanex                                                                 
   Corporation                                                              
   shareholders             -         -           -   (46,057)            - 
  Distributions to                                                          
   non-controlling                                                          
   interests                -         -           -         -             - 
  Equity                                                                    
   contributions                                                            
   by non-                                                                  
   controlling                                                              
   interests                -         -           -         -             - 
----------------------------------------------------------------------------
Balance, September                                                          
 30, 2011          93,217,820   454,934      22,231   905,217       (18,632)
  Net income                                           63,871             - 
  Other                                                                     
   comprehensive                                                            
   income (loss)                                      (10,258)        2,664 
  Compensation                                                              
   expense                                                                  
   recorded for                                                             
   stock options            -         -         180         -             - 
  Issue of shares                                                           
   on exercise of                                                           
   stock options       29,935       370           -         -             - 
  Reclassification                                                          
   of grant date                                                            
   fair value on                                                            
   exercise of                                                              
   stock options            -       130        (130)        -             - 
  Dividend                                                                  
   payments to                                                              
   Methanex                                                                 
   Corporation                                                              
   shareholders             -         -           -   (15,852)            - 
  Distributions to                                                          
   non-controlling                                                          
   interests                -         -           -         -             - 
  Equity                                                                    
   contributions                                                            
   by non-                                                                  
   controlling                                                              
   interests                -         -           -         -             - 
----------------------------------------------------------------------------
Balance, December                                                           
 31, 2011          93,247,755   455,434      22,281   942,978       (15,968)
  Net income                -         -           -    71,748             - 
  Other                                                                     
   comprehensive                                                            
   income                   -         -           -         -         1,647 
  Compensation                                                              
   expense                                                                  
   recorded for                                                             
   stock options            -         -         564         -             - 
  Issue of shares                                                           
   on exercise of                                                           
   stock options      720,455    13,267           -         -             - 
  Reclassification                                                          
   of grant date                                                            
   fair value on                                                            
   exercise of                                                              
   stock options            -     5,159      (5,159)        -             - 
  Dividend                                                                  
   payments to                                                              
   Methanex                                                                 
   Corporation                                                              
   shareholders             -         -           -   (50,649)            - 
  Distributions                                                             
   to non-                                                                  
   controlling                                                              
   interests                -         -           -         -             - 
  Equity                                                                    
   contributions                                                            
   by non-                                                                  
   controlling                                                              
   interests                -         -           -         -             - 
----------------------------------------------------------------------------
Balance, September                                                          
 30, 2012          93,968,210 $ 473,860 $    17,686  $964,077  $    (14,321)
----------------------------------------------------------------------------
 
                                                                          
                                                                          
                                                                          
                                                      Non-                
                              Shareholders'    Controlling          Total 
                                     Equity      Interests         Equity 
--------------------------------------------------------------------------
Balance, December                                                         
 31, 2010                     $   1,253,211  $     156,412  $   1,409,623 
  Net income                        137,455         17,425        154,880 
  Other                                                                   
   comprehensive                                                          
   income                             7,461          4,997         12,458 
  Compensation                                                            
   expense                                                                
   recorded for                                                           
   stock options                        657              -            657 
  Issue of shares                                                         
   on exercise of                                                         
   stock options                     11,023              -         11,023 
  Reclassification                                                        
   of grant date                                                          
   fair value on                                                          
   exercise of                                                            
   stock options                          -              -              - 
  Dividend                                                                
   payments to                                                            
   Methanex                                                               
   Corporation                                                            
   shareholders                     (46,057)             -        (46,057)
  Distributions to                                                        
   non-controlling                                                        
   interests                              -         (7,850)        (7,850)
  Equity                                                                  
   contributions                                                          
   by non-                                                                
   controlling                                                            
   interests                              -         19,200         19,200 
--------------------------------------------------------------------------
Balance, September                                                        
 30, 2011                         1,363,750        190,184      1,553,934 
  Net income                         63,871          9,249         73,120 
  Other                                                                   
   comprehensive                                                          
   income (loss)                     (7,594)         1,535         (6,059)
  Compensation                                                            
   expense                                                                
   recorded for                                                           
   stock options                        180              -            180 
  Issue of shares                                                         
   on exercise of                                                         
   stock options                        370              -            370 
  Reclassification                                                        
   of grant date                                                          
   fair value on                                                          
   exercise of                                                            
   stock options                          -              -              - 
  Dividend                                                                
   payments to                                                            
   Methanex                                                               
   Corporation                                                            
   shareholders                     (15,852)             -        (15,852)
  Distributions to                                                        
   non-controlling                                                        
   interests                              -         (3,730)        (3,730)
  Equity                                                                  
   contributions                                                          
   by non-                                                                
   controlling                                                            
   interests                              -              -              - 
--------------------------------------------------------------------------
Balance, December                                                         
 31, 2011                         1,404,725        197,238      1,601,963 
  Net income                         71,748         28,653        100,401 
  Other                                                                   
   comprehensive                                                          
   income                             1,647          1,327          2,974 
  Compensation                                                            
   expense                                                                
   recorded for                                                            
   stock options                        564              -            564 
  Issue of shares                                                         
   on exercise of                                                         
   stock options                     13,267              -         13,267 
  Reclassification                                                        
   of grant date                                                          
   fair value on                                                          
   exercise of                                                            
   stock options                          -              -              - 
  Dividend                                                                
   payments to                                                            
   Methanex                                                               
   Corporation                                                            
   shareholders                     (50,649)             -        (50,649)
  Distributions                                                           
   to non-                                                                 
   controlling                                                            
   interests                              -        (42,292)       (42,292)
  Equity                                                                  
   contributions                                                          
   by non-                                                                 
   controlling                                                            
   interests                              -          1,000          1,000 
--------------------------------------------------------------------------
Balance, September                                                        
 30, 2012                     $   1,441,302  $     185,926  $   1,627,228 
--------------------------------------------------------------------------

 
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           Nine Months Ended    
                    --------------------------------------------------------
                            Sep 30        Sep 30        Sep 30        Sep 30
                              2012          2011          2012          2011
----------------------------------------------------------------------------
                                                                            
CASH FLOWS FROM OPERATING ACTIVITIES                                        
  Net income          $      1,445  $     74,597  $    100,401  $    154,880
  Add (deduct) non-                                                         
   cash items:                                                              
    Depreciation and        47,689        43,696       130,092       113,109
     amortization                                                           
    Louisiana               25,688             -        25,688             -
     project                                                                
     relocation non-                                                        
     cash charges                                                           
    Income tax            (14,817)        18,838         9,498        43,731
     expense                                                                
     (recovery)                                                             
    Share based              3,340      (20,489)        24,880       (8,749)
     compensation                                                           
     expense                                                                
     (recovery)                                                             
    Finance costs           17,764        17,386        56,434        43,929
    Other                    6,613       (2,372)        10,459         (949)
  Income taxes paid        (4,239)       (4,992)      (15,337)      (32,396)
  Other cash               (3,622)       (1,823)      (18,877)       (8,819)
   payments,                                                                
   including share-                                                         
   based                                                                    
   compensation                                                             
----------------------------------------------------------------------------
  Cash flows from           79,861       124,841       323,238       304,736
   operating                                                                
   activities before                                                        
   undernoted                                                               
  Changes in non-           51,392       (5,722)        36,647        16,537
   cash working                                                             
   capital (note 8)                                                         
----------------------------------------------------------------------------
                           131,253       119,119       359,885       321,273
----------------------------------------------------------------------------
                                                                            
CASH FLOWS FROM FINANCING ACTIVITIES                                        
  Dividend payments       (17,384)      (15,847)      (50,649)      (46,057)
   to Methanex                                                              
   Corporation                                                              
   shareholders                                                             
  Interest paid,          (31,520)      (25,154)      (58,543)      (55,405)
   including                                                                
   interest rate                                                            
   swap settlements                                                         
  Net proceeds on                -             -       246,548         2,700
   issue of long-                                                           
   term debt                                                                
  Repayment of long-     (217,682)      (16,677)     (242,970)      (41,517)
   term debt and                                                            
   limited recourse                                                         
   debt                                                                     
  Change in project              -      (29,000)             -      (31,209)
   finance reserve                                                         
   accounts                                                                 
  Equity                         -             -         1,000        19,200
   contributions by                                                         
   non-controlling                                                          
   interests                                                                
  Cash distributions      (29,633)             -      (45,632)       (1,250)
   to non-                                                                  
   controlling                                                              
   interests                                                                
  Proceeds on issue          3,000           843        13,267        11,023
   of shares on                                                             
   exercise of stock                                                        
   options                                                                  
  Repayment of             (1,693)       (1,545)       (4,985)       (4,390)
   finance leases                                                           
   and other long                                                           
   term liabilities                                                         
----------------------------------------------------------------------------
                         (294,912)      (87,380)     (141,964)     (146,905)
----------------------------------------------------------------------------
                                                                            
CASH FLOWS FROM INVESTING ACTIVITIES                                        
  Property, plant         (19,879)      (13,571)     (111,469)      (92,353)
   and equipment                                                            
  Louisiana project       (24,281)             -      (38,604)             -
   expenditures                                                             
  Oil and gas assets       (5,719)       (4,272)      (17,674)      (21,769)
  GeoPark repayments             -             -        10,039         7,551
  Changes in non-          (6,606)         1,455       (7,859)         (616)
   cash working                                                             
   capital related                                                          
   to investing                                                             
   activities (note 8)                                                    
----------------------------------------------------------------------------
                          (56,485)      (16,388)     (165,567)     (107,187)
----------------------------------------------------------------------------
  Increase               (220,144)        15,351        52,354        67,181
   (decrease) in                                                            
   cash and cash                                                            
   equivalents                                                              
  Cash and cash            623,209       245,624       350,711       193,794
   equivalents,                                                             
   beginning of                                                             
   period                                                                   
----------------------------------------------------------------------------
  Cash and cash       $    403,065  $    260,975  $    403,065  $    260,975
   equivalents, end                                                         
   of 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: 
Methanex Corporation (the Company) is an incorporated entity with
corporate offices in Vancouver, Canada. The Company's operations
consist of the production and sale of methanol, a commodity chemical.
The Company is the world's largest supplier of methanol to major
international markets in Asia Pacific, North America, Europe and
Latin America. 
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 those
followed in the most recent annual consolidated financial statements.
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 the
Company's proportionate share of the Atlas methanol facility. 
These 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 October 24,
2012.  
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 nine month periods
ended September 30, 2012 is $528 million (2011 - $516 million) and
$1,543 million (2011 - $1,513 million), respectively.  
3. Property, plant and equipment:  


 
                  Buildings, Plant                                          
                   Installations &       Oil & Gas                          
                         Machinery      Properties       Other         Total
----------------------------------------------------------------------------
Cost at       $          3,294,593  $       81,204  $   67,041  $  3,442,838
 September                                                                  
 30, 2012                                                                   
Accumulated              1,141,674          47,252      26,197     1,215,123
 depreciation                                                               
 at                                                                       
 September                                                                  
 30, 2012                                                                   
----------------------------------------------------------------------------
Net book      $          2,152,919  $       33,952  $   40,844  $  2,227,715
 value at                                                                   
 September                                                                  
 30, 2012                                                                   
----------------------------------------------------------------------------
Cost at       $          3,210,923  $       77,486  $   88,642  $  3,377,051
 December                                                                   
 31, 2011                                                                   
Accumulated              1,070,267          32,990      40,771     1,144,028
 depreciation                                                               
 at                                                                       
 December                                                                   
 31, 2011                                                                   
----------------------------------------------------------------------------
Net book      $          2,140,656  $       44,496  $   47,871  $  2,233,023
 value at                                                                   
 December                                                                   
 31, 2011                                                                   
----------------------------------------------------------------------------

 
In July 2012, the Board of Directors gave final approval to proceed
with the project to relocate an idle Chile facility to Geismar,
Louisiana with an estimated project cost of approximately $550
million. Under International Financial Reporting Standards, certain
costs incurred in relation to relocating an asset are not eligible
for capitalization to Property, Plant and Equipment and are required
to be charged directly to income. For the nine month period ended
September 30 2012, the Company had incurred $77.5 million in
expenditures related to this project, of which $38.6 million was
recorded to Property, Plant and Equipment and the remaining $38.9
million ($23.3 million after-tax) was recognized in Louisiana project
relocation expenses and charges in the Consolidated Statements of
Income. 
In addition, for the three month period ended September 30, 2012, the
Company has charged to income $25.7 million (17.6 million after-tax)
related to the carrying value of the Chile facility being relocated. 
4. Long-term debt: 


 
                                                         Sep 30       Dec 31
                                                           2012         2011
----------------------------------------------------------------------------
Unsecured notes                                                             
  5.25% due March 1, 2022                           $   246,266  $         -
  6.00% due August 15, 2015                             149,286      149,119
  8.75% due August 15, 2012                                   -      199,643
----------------------------------------------------------------------------
                                                        395,552      348,762
Atlas limited recourse debt facilities                   57,108       64,397
Egypt limited recourse debt facilities                  438,142      470,208
Other limited recourse debt facilities                   18,050       19,888
----------------------------------------------------------------------------
                                                        908,852      903,255
Less current maturities                                (53,334)    (251,107)
----------------------------------------------------------------------------
                                                    $   855,518  $   652,148
----------------------------------------------------------------------------

 
In February 2012, the Company issued $250 million of unsecured notes
bearing an interest rate of 5.25% and due March 1, 2022 (effective
yield 5.30%). During the three months ended September 30, 2012, the
Company repaid $200 million of unsecured notes bearing an interest
rate of 8.75%. 
During the three and nine month periods ended September 30, 2012, the
Company made repayments on its Egypt limited recourse debt facilities
of $17.1 million and $33.6 million, respectively, and other limited
recourse debt facilities of $0.6 million and $1.8 million,
respectively. The Company also made repayments on its Atlas limited
recourse debt facilities of $7.5 million during the nine month period
ended September 30, 2012. 
The Company has a $200 million unsecured revolving bank facility
provided by highly rated financial institutions which expires
mid-2015. 
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 that apply only to these entities, including restrictions
on the incurrence of additional indebtedness, a requirement to
fulfill certain conditions before the payment of cash or other
distributions and a restriction on these distributions if there is a
default subsisting. The Egypt limited recourse debt facilities also
contain a covenant to complete by March 31, 2013 certain land title
registrations and related mortgages that require action by Egyptian
government entities. Management does not believe that the
finalization of these items is material. 
At September 30, 2012, management believes the Company was in
compliance with all of the covenants and default provisions related
to long-term debt obligations. 
5. Finance costs: 


 
                                  Three Months Ended       Nine Months Ended
                            ------------------------------------------------
                                  Sep 30      Sep 30      Sep 30      Sep 30
                                    2012        2011        2012        2011
----------------------------------------------------   ---------------------
Finance costs                 $   18,438  $   17,386  $   57,108  $   51,159
Less capitalized interest              -           -           -     (7,230)
 related to Egypt plant                                                     
 under construction                                                         
Less capitalized interest          (674)           -       (674)           -
 related to Louisiana plant                                                 
 under construction                                                         
----------------------------------------------------------------------------
                              $   17,764  $   17,386  $   56,434  $   43,929
----------------------------------------------------------------------------

 
Finance costs are primarily comprised of interest on borrowings and
finance lease obligations, the effective portion of interest rate
swaps designated as cash flow hedges, amortization of deferred
financing fees, and accretion expense associated with site
restoration costs. Interest during construction is capitalized until
the plant is substantially completed and ready for productive use.
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 to March 31, 2015. 
6. Net income per common share: 
Diluted net income per common share is calculated by giving effect to
the potential dilution that would occur if outstanding stock options
and tandem share appreciation rights (TSARs) were exercised or
converted to common shares. Outstanding 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, regardless of how the plan
is accounted for. Accordingly, TSARs that are accounted for using the
cash-settled method will require an adjustment to the numerator and
denominator if the equity-settled method is determined to have a
dilutive effect on diluted net income per common share. 
During the three month period ended September 30, 2012, the Company
recorded a share-based compensation expense related to TSARs.
However, for this period, the equity-settled method has been
determined to be the more dilutive for purposes of calculating
diluted net income per common share.  
A reconciliation of the net income used for the purpose of
calculating diluted net income per common share is as follows: 


 
                               Three Months Ended       Nine Months Ended   
                            ------------------------------------------------
                                  Sep 30      Sep 30      Sep 30      Sep 30
                                    2012        2011        2012        2011
----------------------------------------------------   ---------------------
Numerator for basic net       $  (2,571)  $   62,316  $   71,748  $  137,455
 income (loss) per common                                                   
 share                                                                      
Adjustment for the effect of                                                
 TSARs:                                                                     
Cash settled expense                 306     (5,905)           -     (3,085)
 (recovery) included in net                                                 
 income                                                                     
Equity settled expense             (733)       (575)           -     (3,751)
----------------------------------------------------------------------------
Numerator for diluted net     $  (2,998)  $   55,836  $   71,748  $  130,619
 income (loss) per common                                                   
 share                                                                      
----------------------------------------------------------------------------

 
Stock options and TSARs are considered dilutive when the average
market price of the Company's common shares during the period
disclosed exceeds the exercise price of the stock option or TSAR. A
reconciliation of the number of common shares used for the purposes
of calculating basic and diluted net income per common share is as
follows: 


 
                            Three Months Ended         Nine Months Ended    
                        ----------------------------------------------------
                               Sep 30       Sep 30       Sep 30       Sep 30
                                 2012         2011         2012         2011
----------------------------------------------------------------------------
Denominator for basic      93,880,221   93,202,401   93,691,597   92,954,844
 net income (loss) per                                                      
 common share                                                               
Effect of dilutive stock            -    1,234,174    1,195,682    1,416,618
 options                                                                    
Effect of dilutive TSARs            -        5,106            -       32,800
----------------------------------------------------------------------------
Denominator for diluted    93,880,221   94,441,681   94,887,279   94,404,262
 net income (loss) per                                                      
 common share(1)                                                            
----------------------------------------------------------------------------
(1) Nil and 3,240,707 outstanding stock options for each of the three and
    nine month periods ended September 30, 2012, respectively, are dilutive
    and have been included in the diluted weighted average number of common
    shares.      

 
For the three and nine month periods ended September 30, 2012, basic
and diluted net income per common share attributable to Methanex
shareholders were as follows: 


 
                               Three Months Ended       Nine Months Ended   
                            ------------------------------------------------
                                  Sep 30      Sep 30      Sep 30      Sep 30
                                    2012        2011        2012        2011
----------------------------------------------------   ---------------------
Basic net income (loss) per   $   (0.03)  $     0.67  $     0.77  $     1.48
 common share                                                               
Diluted net income (loss)     $   (0.03)  $     0.59  $     0.76  $     1.38
 per common share                                                           
----------------------------------------------------------------------------

 
7. Share-based compensation: 
a) Stock options, share appreciation rights (SARs) and tandem share
appreciation rights (TSARs):  
(i) Outstanding units:  
Information regarding units outstanding and exercisable at September
30, 2012 is as follows: 


 
                           Units Outstanding at         Units Exercisable at
                            September 30, 2012           September 30, 2012 
                    --------------------------------------------------------
                       Weighted                                        
                        Average                                     
                      Remaining  Number of      Weighted  Number of Weighted
                    Contractual      Units       Average      Units  Average
Range of Exercise          Life       Out-      Exercise      Exer- Exercise
 Prices                 (Years)   standing         Price    cisable    Price
----------------------------------------------------------------------------
Stock options:                                                              
 $6.33 to 11.56             3.2  1,061,605  $       6.54  1,061,605  $  6.54
 $20.76 to 25.22            1.2  1,254,877         23.54  1,228,277    23.51
 $28.43 to 31.73            2.9  1,008,225         28.72    882,125    28.44
----------------------------------------------------------------------------
                            2.4  3,324,707  $      19.69  3,172,007  $ 19.20
----------------------------------------------------------------------------
SARs:                                                                       
 $25.22 to 31.74            5.5    913,125  $      28.63    272,459  $ 26.20
----------------------------------------------------------------------------
TSARs:                                                                      
 $23.36 to 31.88            5.4  1,826,035  $      28.45    620,380  $ 26.12
----------------------------------------------------------------------------

 
(ii) Compensation expense related to stock options: 
For the three and nine month periods ended September 30, 2012,
compensation expense related to stock options included in cost of
sales and operating expenses was $0.2 million (2011 - $0.2 million)
and $0.6 million (2011 - $0.7 million), respectively. The fair value
of each stock option grant was estimated on the date of grant using
the Black-Scholes option pricing model.  
(iii) Compensation expense related to SARs and TSARs: 
Compensation expense for SARs and TSARs is measured based on their
fair value and is recognized over the vesting period. Changes in fair
value each period are recognized in net income for the proportion of
the service that has been rendered at each reporting date. The fair
value at September 30, 2012 was $15.1 million compared with the
recorded liability of $12.0 million. The difference between the fair
value and the recorded liability of $3.1 million will be recognized
over the weighted average remaining vesting period of approximately
1.8 years. The weighted average fair value of the vested SARs and
TSARs was estimated at September 30, 2012 using the Black-Scholes
option pricing model.  
For the three and nine month periods ended September 30, 2012,
compensation expense related to SARs and TSARs included an expense in
cost of sales and operating expenses of $0.1 million (2011 - recovery
of $8.4 million) and $7.2 million (2011 - recovery of $4.5 million),
respectively. This included a recovery of $1.1 million (2011 -
recovery of $10.0 million) and an expense of $0.3 million (2011 -
recovery of $10.4 million), respectively, related to the effect of
the change in the Company's share price for the three and nine month
periods ended September 30, 2012.  
b) Deferred, restricted and performance share units: 
Deferred, restricted and performance share units outstanding at
September 30, 2012 are as follows:  


 
                                         Number of    Number of    Number of
                                          Deferred   Restricted  Performance
                                       Share Units  Share Units  Share Units
----------------------------------------------------------------------------
Outstanding at December 31, 2011           597,911       48,588    1,103,049
  Granted                                   19,898       20,400      358,330
  Granted in-lieu of dividends               6,929          819       12,352
  Redeemed                                (66,531)            -    (413,138)
  Cancelled                                      -            -      (8,393)
----------------------------------------------------------------------------
Outstanding at June 30, 2012               558,207       69,807    1,052,200
----------------------------------------------------------------------------
  Granted                                    1,187            -            -
  Granted in-lieu of dividends               3,622          455        6,808
  Cancelled                                      -            -      (6,936)
----------------------------------------------------------------------------
Outstanding at September 30, 2012          563,016       70,262    1,052,072
----------------------------------------------------------------------------

 
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 vesting 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
September 30, 2012 was $46.3 million compared with the recorded
liability of $40.6 million. The difference between the fair value and
the recorded liability of $5.7 million will be recognized over the
weighted average remaining vesting period of approximately 1.7 years. 
For the three and nine month periods ended September 30, 2012,
compensation expense related to deferred, restricted and performance
share units included in cost of sales and operating expenses was an
expense of $3.1 million (2011 - recovery of $12.2 million) and $17.1
million (2011 - recovery of $4.8 million), respectively. This
included an expense of $1.1 million (2011 - recovery of $13.8
million) and $7.3 million (2011 - recovery of $12.1 million),
respectively, related to the effect of the change in the Company's
share price for the three and nine month periods ended September 30,
2012. 
8. Changes in non-cash working capital: 
Changes in non-cash working capital for the three and nine month
periods ended September 30, 2012 were as follows:  


 
                               Three Months Ended       Nine Months Ended   
                            ------------------------------------------------
                                  Sep 30      Sep 30      Sep 30      Sep 30
                                    2012        2011        2012        2011
----------------------------------------------------------------------------
Decrease (increase) in non-                                                 
 cash working capital:                                                      
  Trade and other             $ (15,519)  $   14,790  $ (20,669)  $ (16,627)
   receivables                                                              
  Inventories                     21,747     (8,379)      57,696    (15,472)
  Prepaid expenses                 6,750         274     (4,106)     (4,129)
Trade, other payables and         31,237    (27,933)     (4,690)      22,990
 accrued liabilities,                                                       
 including long-term                                                        
 payables included in other                                                 
 long-term liabilities                                                      
----------------------------------------------------------------------------
                                  44,215    (21,248)      28,231    (13,238)
Adjustments for items not            571      16,981         557      29,159
 having a cash effect and                                                   
 working capital changes                                                    
 relating to taxes and                                                      
 interest paid                                                              
----------------------------------------------------------------------------
Changes in non-cash working   $   44,786  $  (4,267)  $   28,788  $   15,921
 capital having a cash                                                      
 effect                                                                     
----------------------------------------------------------------------------
                                                                            
These changes relate to the                                                 
 following activities:                                                      
  Operating                   $   51,392  $  (5,722)  $   36,647  $   16,537
  Investing                      (6,606)       1,455     (7,859)       (616)
----------------------------------------------------------------------------
Changes in non-cash working   $   44,786  $  (4,267)  $   28,788  $   15,921
 capital                                                                    
----------------------------------------------------------------------------

 
9. Financial instruments: 
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 to March 31, 2015. The
Company has designated these interest rate swaps as cash flow hedges.
These interest rate swaps had an outstanding notional amount of $329
million as at September 30, 2012. The notional amount decreases over
the expected repayment period. At September 30, 2012, these interest
rate swap contracts had a negative fair value of $31.8 million (2011
- $41.5 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 September 30,
2012, the Company had outstanding forward exchange contracts
designated as cash flow hedges to sell a notional amount of 28.4
million euro in exchange for US dollars and these euro contracts had
a negative fair value of $0.5 million (2011 - positive fair value of
$0.4 million) recorded in trade, other payables and accrued
liabilities. Changes in fair value of derivative financial
instruments designated as cash flow hedges have been recorded in
other comprehensive income.  
10. Contingent liability: 
The Board of Inland Revenue of Trinidad and Tobago issued an
assessment in 2011 against the Company's 63.1% owned joint venture,
Atlas Methanol Company Unlimited ("Atlas"), in respect of the 2005
financial year. All subsequent tax years remain open to assessment.
The assessment relates to the pricing arrangements of certain
long-term fixed price sales contracts that extend to 2014 and 2019
related to methanol produced by Atlas. The impact of the amount in
dispute for the 2005 financial year is nominal as Atlas was not
subject to corporation income tax in that year. Atlas has partial
relief from corporation income tax until 2014.  
The Company has lodged an objection to the assessment. Based on the
merits of the case and legal interpretation, management believes its
position should be sustained. 


 
Methanex Corporation                                                 
Quarterly History (unaudited)                                        
                                                                     
                        YTD    Q3     Q2    Q1                              
                       2012  2012   2012  2012  2011    Q4    Q3    Q2    Q1
----------------------------------------------------------------------------
METHANOL SALES                                                              
 VOLUMES                                                                    
(thousands of tonnes)                                                       
                                                                            
Methanex-produced     2,980 1,053  1,001   926 3,853 1,052   983   970   848
Purchased methanol    1,901   641    569   691 2,815   644   672   664   835
Commission sales (1)    679   205    276   198   846   208   235   231   172
----------------------------------------------------------------------------
                                                                            
                      5,560 1,899  1,846 1,815 7,514 1,904 1,890 1,865 1,855
----------------------------------------------------------------------------
                                                                            
METHANOL PRODUCTION                                                         
(thousands of tonnes)                                                       
                                                                            
Chile                   254    59     82   113   554   113   116   142   183
New Zealand             730   346    210   174   830   211   209   207   203
Atlas, Trinidad                                                             
 (63.1%)                646   255    264   127   891   195   170   263   263
Titan, Trinidad         597   186    196   215   711   180   224   186   121
Egypt (60%)             428    62    164   202   532   132   191   178    31
Medicine Hat            349   117    118   114   329   130   125    74     -
----------------------------------------------------------------------------
                                                                            
                      3,004 1,025  1,034   945 3,847   961 1,035 1,050   801
----------------------------------------------------------------------------
                                                                            
AVERAGE REALIZED                                                            
 METHANOL PRICE (2)                                                         
 ($/tonne)              380   373    384   382   374   388   377   363   367
 ($/gallon)            1.14  1.12   1.15  1.15  1.12  1.17  1.13  1.09  1.10
                                                                            
PER SHARE                                                                   
 INFORMATION(3)($ per                                                       
 share)                                                                     
 Basic net income                                                           
  (loss)               0.77 (0.03)  0.56  0.24  2.16  0.69  0.67  0.44  0.37
 Diluted net income                                                         
  (loss)               0.76 (0.03)  0.50  0.23  2.06  0.68  0.59  0.43  0.37
 Adjusted diluted net                                                       
  income(4)            1.26  0.38   0.47  0.41  1.92  0.69  0.43  0.41  0.39
 
                       2010    Q4    Q3    Q2    Q1
---------------------------------------------------
                                                   
                                                   
METHANOL SALES                                     
 VOLUMES                                           
(thousands of tonnes)                              
                                                   
Methanex-produced     3,540   831   885   900   924
Purchased methanol    2,880   806   792   678   604
Commission sales (1)    509   151   101   107   150
---------------------------------------------------
                                                   
                      6,929 1,788 1,778 1,685 1,678
---------------------------------------------------
                                                   
METHANOL PRODUCTION                                
(thousands of tonnes)                              
                                                   
Chile                   935   208   194   229   304
New Zealand             830   206   200   216   208
Atlas, Trinidad                                    
 (63.1%)                884   266   284    96   238
Titan, Trinidad         891   233   217   224   217
Egypt (60%)               -     -     -     -     -
Medicine Hat              -     -     -     -     -
---------------------------------------------------
                                                   
                      3,540   913   895   765   967
---------------------------------------------------
                                                   
AVERAGE REALIZED                                   
 METHANOL PRICE (2)                                
 ($/tonne)              306   348   286   284   305
 ($/gallon)            0.92  1.05  0.86  0.85  0.92
                                                   
PER SHARE                                          
 INFORMATION(3)($ per                              
 share)                                            
 Basic net income                                  
  (loss)               1.04  0.28  0.31  0.16  0.29
 Diluted net income                                
  (loss)               1.03  0.27  0.31  0.15  0.29
 Adjusted diluted net                              
  income(4)            0.93  0.42  0.13  0.09  0.29
                                                                            
----------------------------------------------------------------------------
(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 Methanex-produced (attributable to        
    Methanex shareholders) and purchased methanol.                          
                                                                            
(3) Per share information calculated using net income (loss) attributable to
    Methanex shareholders.                                                  
                                                                            
(4) This item is a non-GAAP measure that does not have any standardized     
    meaning prescribed by GAAP and therefore is unlikely to be comparable to
    similar measures presented by other companies. Refer to Additional      
    Information - Supplemental Non-GAAP Measures for a description of the
    non-GAAP measure and reconciliation to the most comparable GAAP measure.

  
Contacts:
Jason Chesko
Director, Investor Relations
Methanex Corporation
604 661 2600 or Toll Free: 1 800 661 8851
invest@methanex.com
www.methanex.com