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Methanex Continues to Generate Substantial Cash in Strong Methanol Price Environment

January 27, 2003

VANCOUVER, BRITISH COLUMBIA--Methanex Corporation recorded income before unusual items (after-tax) of US$55.3 million (US$0.44 per share) and generated EBITDA of US$99.0 million for the fourth quarter ended December 31, 2002. The fourth quarter 2002 results compare to net income of US$58.5 million (US$0.47 per share) and EBITDA of US$108.0 million for the third quarter 2002, and to a net loss of US$13.0 million (US$0.10 per share) and EBITDA of US$8.6 million for the same period in 2001. Including the impact of the unusual items consisting of an asset restructuring charge relating to the write-off of the Fortier facility and an adjustment to our site restoration accrual, we recorded a net loss in the fourth quarter 2002 of US$30.4 million (US$0.24 per share).

For the year ended December 31, 2002, we recorded income before unusual items (after-tax) of US$112.1 million (US$0.89 per share) and EBITDA of US$269.6 million compared with income before unusual items (after-tax) of US$82.5 million (US$0.53 per share) and EBITDA of US$238.4 million for the prior year. Including the impact of unusual items, net income for the year ended December 31, 2002 was US$26.4 million (US$0.21 per share) compared with US$71.4 million (US$0.46 per share) for 2001.

Pierre Choquette, President and CEO of Methanex commented, "The fourth quarter of 2002 allowed us to continue to demonstrate our outstanding cash generation capability. As anticipated, our costs were slightly higher due primarily to higher North American natural gas costs and the impact of a planned turnaround at our low cost New Zealand facility. However, the tightening of methanol supply/demand conditions that we experienced in the third quarter has continued, resulting in further price strengthening. Our average realized price for the fourth quarter was US$188 per tonne, 3% higher than third quarter levels. And pricing strength is continuing early in the new year. For example, the European contract price for the first quarter of 2003 increased to EURO 228, and now stands at approximately US$238 per tonne (US$0.72 per gallon), before discounts. Currently, US spot prices are approximately US$300 per tonne (US$0.90 per gallon) and prices in Asia are currently between US$230 and US$240 per tonne."

Mr. Choquette continued, "Looking ahead, we remain optimistic that the very favourable methanol supply/demand fundamentals will continue. We are well positioned to generate significant cash flow throughout 2003 as only limited new capacity is expected to impact the market." Mr. Choquette added, "We believe that these tight market conditions, combined with MTBE demand growth in other parts of the world, will minimize the impact of the phase out of MTBE by California gasoline producers." Mr. Choquette noted, "The industry supply/demand balance could see further tightening if we have to reduce production at our New Zealand facilities as a result of the uncertain gas supply situation."

Mr. Choquette concluded, "We continue to enjoy excellent financial strength and flexibility. Cash on hand at the end of December 2002 was US$421 million, and we also have an undrawn US$291 million credit facility. This financial strength has provided us an excellent opportunity to reward shareholders with a special dividend of US$0.25 per share. After distribution of this special dividend, we continue to have the financial capacity to complete our capital maintenance spending program, fund the remaining equity contribution for Atlas, complete the construction of Chile IV and pursue new opportunities to enhance our strategic position in methanol."

A conference call is scheduled for Tuesday, January 28 at 1:00 pm EST (10:00 am PST) to review these fourth quarter results. To access the call, dial the Telus Conferencing operator ten minutes prior to the start of the call at (416) 883-0139, or toll free at (888) 458-1598. The security passcode for the call is 75577. A playback version of the conference call will be available until February 4th at (877) 653-0545. The reservation number for the playback version is 148071. There will be a simultaneous audio-only webcast of the conference call, which can be accessed from our website at www.methanex.com.

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

Information in this news release and the attached management's discussion and analysis may contain forward-looking statements. By their nature, such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. They include world-wide economic conditions, the availability and cost of gas feedstock, the ability to implement business strategies and pursue business opportunities, conditions in the methanol and other industries including the supply and demand for methanol and the risks attendant with producing and marketing methanol and carrying out major capital expenditure projects. Please also refer to page 28 of our 2001 Annual Report for more information on forward-looking statements.

Interim Report

For the three months ended December 31, 2002

At December 31, 2002, the number of common shares outstanding was 125,651,639.

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Message to Shareholders

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

This fourth quarter, 2002 Message to Shareholders should be read in conjunction with the annual consolidated financial statements and the Management's Discussion and Analysis included in the 2001 Annual Report.

($ millions, except where noted)  2002                  2001   
                     Three       Three                 Three
                    months      months       Year     months       Year
                     ended       ended      ended      ended      ended
                  December   September   December   December   December
                        31          30         31         31         31
------------------------------------------------------------------------
Sales volumes
 (thousands of
 tonnes)                            
 Company produced    1,347       1,419      5,686      1,522      5,390
 Purchased and
  commission           475         395      1,534        339      2,000
------------------------------------------------------------------------
                     1,822       1,814      7,220      1,861      7,390
Average realized
 methanol price 
 ($ per tonne)     $   188     $   182    $   155    $   115    $   172
Net income (loss)  $ (30.4)    $  58.5    $  26.4    $ (13.0)   $  71.4
Income (loss)
 before unusual
 items (after-tax)
 (1)               $  55.3     $  58.5    $ 112.1    $ (13.0)   $  82.5
Operating income
 (loss)            $  72.9     $  79.8    $ 158.3    $ (21.6)   $ 124.6
EBITDA (2)         $  99.0     $ 108.0    $ 269.6    $   8.6    $ 238.4
Cash flows from
 operating
 activities (3)    $ 91.7      $ 96.3     $ 244.6    $  17.6    $ 219.4
Basic net income
 (loss) per share  $(0.24)     $ 0.47     $  0.21    $ (0.10)   $  0.46
Basic income
 (loss) per share
 before unusual
 items (after-tax)
 (1)               $ 0.44      $ 0.47     $  0.89    $ (0.10)   $  0.53
Weighted average
 number of common
 shares
 outstanding
 (millions of
 shares)            125.2       124.7       126.6      132.6      154.4
------------------------------------------------------------------------

1. Unusual items include asset restructuring charges and the adjustment to site restoration. For a reconciliation of net income (loss) to income (loss) before unusual items (after-tax) and the basis for the calculation of basic income (loss) per share before unusual items (after-tax), refer to "Supplemental Earnings Measures" at the end of this Interim Report.

2. EBITDA represents net income (loss) before income taxes, interest expense, interest and other income, depreciation and amortization, asset restructuring charges and the adjustment to site restoration. For a reconciliation of net income (loss) to EBITDA, refer to "Supplemental Earnings Measures" at the end of this Interim Report.

3. Before changes in non-cash working capital and the utilization of prepaid natural gas.

Strong Financial Results

For the fourth quarter ended December 31, 2002, we recorded income before unusual items (after-tax) of $55.3 million ($0.44 per share) and EBITDA of $99.0 million. This compares to income before unusual items (after-tax) and net income of $58.5 million ($0.47 per share) and EBITDA of $108.0 million for the third quarter ended September 30, 2002. For the fourth quarter ended December 31, 2001 we recorded a loss before unusual items (after-tax) and a net loss of $13.0 million ($0.10 per share) and EBITDA of $8.6 million. Including the impact of unusual items, comprised of the asset restructuring charge related to the write-down of the Fortier facility and the adjustment to the site restoration accrual, we recorded a net loss for the fourth quarter of 2002 of $30.4 million ($0.24 per share).

For the year ended December 31, 2002, we recorded income before unusual items (after-tax) of $112.1 million ($0.89 per share) and EBITDA of $269.6 million compared with income before unusual items (after-tax) of $82.5 million ($0.53 per share) and EBITDA of $238.4 million for 2001. Including the impact of unusual items, net income for the year ended December 31, 2002 was $26.4 million ($0.21 per share) compared with $71.4 million ($0.46 per share) for 2001.

EBITDA

The change in EBITDA resulted from:

($ millions)                             Q4-2002    Q4-2002       2002
                                        compared   compared   compared
                                            with       with       with
                                         Q3-2002    Q4-2001       2001
------------------------------------------------------------------------
Higher (lower) realized price
 of produced methanol                          9         98        (88)
Lower (higher) cash cost                     (10)        (1)        81
Higher (lower) sales volume of produced
 methanol                                     (7)        (3)        20
Higher (lower) margin on the sale of
 purchased methanol                           (1)        (4)        14
Other, net                                     -          -          4
------------------------------------------------------------------------
Increase (decrease) in EBITDA                 (9)        90         31
------------------------------------------------------------------------

Higher (lower) realized price of produced methanol - Methanol prices are characterized by volatility and are affected by the methanol supply/demand balance, which is influenced by global industry capacity, industry operating rates and the strength of demand.

Shutdowns of high cost capacity resulted in a tight supply/demand balance and higher methanol prices from mid-2000 to mid-2001. Methanol prices declined substantially in the second half of 2001, consistent with general economic conditions, and remained low in the first quarter of 2002. Supply limitations combined with some early signs of a recovery in demand resulted in tight market conditions and higher methanol prices commencing in the second quarter of 2002 and continuing for the remainder of the year and into early 2003.

Our average realized price for the fourth quarter of 2002 of $188 per tonne was $6 per tonne, or 3%, higher than the third quarter of 2002 price of $182 per tonne and $73 per tonne higher than the fourth quarter of 2001 price of $115 per tonne. The higher average realized price for produced methanol increased EBITDA by $9 million in comparison with the third quarter of 2002 and increased EBITDA by $98 million in comparison with the fourth quarter of 2001. The average realized price for the year ended December 31, 2002 was $155 per tonne compared with $172 per tonne for 2001 and this reduced EBITDA by $88 million.

Lower (higher) cash cost - The most significant components of our cash costs are natural gas and distribution costs associated with delivering methanol to customers from our production facilities.

Our cash costs for the fourth quarter of 2002 increased by $10 million compared with the third quarter of 2002 primarily due to higher natural gas costs in North America and a higher proportion of sales of product produced in North America due to a planned turnaround in New Zealand. Our cash costs for the fourth quarter of 2002 were comparable with the same period in 2001.

For the year ended December 31, 2002 our cash costs were $81 million lower than in 2001. Approximately half of the improvement relates to lower natural gas costs in Chile and North America. The remainder of the decrease relates primarily to lower ocean freight and other logistics costs, lower expenditures on business development and strategic initiatives, and lower fixed costs because of the idling of the Medicine Hat facility during the second half of 2001. The decrease in ocean freight costs is the result of focussed initiatives to reduce our vessel costs and more efficient shipping patterns. Business development and strategic initiative expenditures in 2001 included the construction of a materials demonstration unit in New Zealand, preliminary-stage costs for exploring opportunities to expand our methanol production capacity in Asia Pacific and costs for examining other business opportunities.

Higher (lower) sales volume of produced methanol - Higher sales volume of produced methanol increased EBITDA for the year ended December 31, 2002 by $20 million compared with 2001. The increase in sales volume of produced methanol is the result of higher production volumes at our facilities in 2002. The planned turnaround in New Zealand during the fourth quarter of 2002 and increased sales of purchased product resulted in lower sales volume of produced product and reduced EBITDA by $7 million compared with the third quarter of 2002 and reduced EBITDA by $3 million compared with the fourth quarter of 2001.

Higher (lower) margin on the sale of purchased methanol - We incurred a loss of $6 million on the sale of 278,000 tonnes of purchased methanol in the fourth quarter of 2002 compared with a loss of $5 million in the third quarter of 2002 and a loss of $2 million in the fourth quarter of 2001. For the year ended December 31, 2002 we incurred a loss of $8 million compared with a loss of $22 million for 2001.

Depreciation and Amortization

Depreciation and amortization expense for the fourth quarter of 2002 was $26 million compared with $30 million for the fourth quarter of 2001. For the year ended December 31, 2002 depreciation and amortization expense was $111 million compared with $114 million for 2001.

Interest Expense and Interest and Other Income

Interest Expense - Interest expense for the fourth quarter of 2002 was $6 million compared with $7 million for the fourth quarter of 2001. For the year ended December 31, 2002 interest expense was $29 million compared with $32 million for 2001. The decrease for both comparative periods is due to an increase in capitalized interest related to the construction of the Atlas and Chile IV projects partially offset by an increase in the level of long-term debt.

Interest and Other Income - Interest and other income for the fourth quarter of 2002 was $2 million compared with $7 million for the fourth quarter of 2001. For the year ended December 31, 2002 interest and other income was $10 million compared with $19 million for 2001. The decrease for both comparative periods is explained partly by an additional $3 million of interest income recorded in the fourth quarter of 2001 related to the settlement of an income tax dispute in Canada. The remainder of the decrease is due primarily to lower average cash balances and interest rates in 2002 compared with 2001 offset partially by higher foreign exchange gains in 2002 compared with 2001.

Asset Restructuring Charge and Site Restoration Adjustment ("Unusual Items")

During the fourth quarter of 2002 we recorded an asset restructuring charge of $115 million related to the write-off of our Fortier, Louisiana methanol facility which has been idled since March of 1999. The Fortier asset restructuring charge was partially offset by a $27 million reduction in the accrual for site restoration for our New Zealand facilities. The adjustment to the site restoration accrual was made after completing a comprehensive review and analysis to update the previous estimate.

During the third quarter of 2001 we recorded an asset restructuring charge, before and after income tax expense, of $11 million related to the idling of our Medicine Hat facility.

Income Taxes

The effective income tax rate for the year ended December 31, 2002 was 49% compared with 29% in 2001. Excluding the impact of unusual items the effective income tax rate for the year ended December 31, 2002, was 20% compared with 26% for 2001. The lower effective tax rate in 2002, excluding the impact of unusual items, is primarily due to higher losses in 2001 in Canada where no income tax benefits were recorded. Due to the existence of unrecorded tax benefits in New Zealand, no adjustment was required to income tax expense related to the site restoration adjustment. In the United States, where we incurred the Fortier asset restructuring charge, the income tax recovery was limited to the related future income tax liability recorded in prior years in the amount of $3 million.

Excellent Operating Performance

For the year ended December 31, 2002 we delivered excellent operating performance and operated our production facilities, excluding the idled Medicine Hat and Fortier plants, at 96% of capacity compared with 91% in 2001. During the fourth quarter of 2002 we had a planned turnaround at one of our plants in New Zealand and operated at 95% of capacity compared with 99% for the third quarter of 2002.

New Zealand Natural Gas

The Maui natural gas field is currently the primary gas supply source for our New Zealand plants. A contractual process initiated in December 2001 to re-determine the economically recoverable natural gas reserves of the Maui field remains underway. The independent expert, who was appointed by the parties to the Maui gas contract, has released a draft determination report and a final report is expected to be released in early 2003. As part of the re-determination process, we filed a submission commenting on the draft determination report.

The independent expert's draft determination of economically recoverable reserves is significantly lower than estimates that were prepared by our consultants. If the findings in the draft report are confirmed in the final determination, we would lose substantially all of our remaining contractual natural gas entitlements from the Maui field. This would result in a substantial near-term reduction in the current production capability of the New Zealand plants unless additional gas can be contracted from other sources. We are continuing to pursue acquisitions of additional gas to supply the New Zealand plants. However, there can be no assurance that we will be able to secure additional gas on commercially acceptable terms.

Supply/Demand Fundamentals

The supply/demand fundamentals continue to be very favourable. Supply disruptions, which have been typical of historical industry operating performance, combined with some recovery in demand during 2002 resulted in extremely tight methanol market conditions, low inventory levels and increased prices. In mid-December 2002 the supply/demand balance became even tighter when two methanol plants in Venezuela, representing approximately 1.5 million tonnes, or five percent, of global demand, were temporarily shut down as a result of political and labour tensions in that country.

There is no new supply expected to impact the market in 2003. In addition, with the global market already well balanced we believe that if we have to reduce production at our New Zealand facilities that this will lead to an even tighter supply/demand balance. Based on these factors, we believe that favourable market conditions and strong pricing will continue in 2003 and that these tight market conditions will minimize the impact of the phase out of MTBE by California gasoline producers. Also, industry experts expect MTBE demand to continue to grow in other parts of the world as actions are taken to reduce lead, benzene and other aromatics content in gasoline and to improve the emissions performance of vehicles generally.

Methanol prices further strengthened late in the fourth quarter of 2002 and into early 2003. The Methanex non-discounted U.S. reference price was increased $23 per tonne ($0.07 per gallon) to $229 per tonne ($0.69 per gallon) for January 2003. In Europe, the first quarter of 2003 contract transaction price was settled at EURO 228 before discounts ($238 per tonne at the time of settlement), an increase of EURO 20 per tonne compared with the fourth quarter of 2002. Currently, spot prices in the United States, on thinly traded spot volumes, are approximately $300 per tonne ($0.90 per gallon). Prices in Asia are currently between $230 and $240 per tonne.

Strategic Initiatives

Low-Cost Methanol Production Capacity

During the fourth quarter of 2002 we made a decision to proceed with the construction of Chile IV, an 840,000 tonne per year expansion to our methanol production facilities in Punta Arenas, Chile. The expansion, which has a 20-year natural gas supply contract, is expected to cost approximately $275 million, including capitalized interest of approximately $25 million, and be completed by early 2005. In connection with the expansion, the gas contracts for our existing plants, Chile I, Chile II and Chile III, have been extended to 2025, 2027 and 2029, respectively.

We are continuing to assess the construction of a 2.0 million tonne per year methanol plant in Western Australia.

Long-Term Methanol Supply Agreement

We have entered into an exclusive agreement with Lyondell Chemical Company to supply their methanol feedstock requirements in North America and Europe. The agreement will commence in January 2003, and will be phased in over time. We will acquire, for $10 million, Lyondell's customer list and a number of customer contracts in North America effective January 1, 2004. In addition, during 2004 we will have certain production rights to Lyondell's 750,000 tonne per year methanol facility in Channelview, Texas.

Liquidity and Capital Projects

Cash flows from operating activities before changes in non-cash working capital and the utilization of prepaid natural gas in the fourth quarter of 2002 were $92 million compared with $18 million for the same period in 2001.

Limited recourse project financing was completed during the fourth quarter of 2002 for the Atlas methanol project in Trinidad, a joint venture with BP in which we have a 63.1% interest. The project financing is comprised of senior debt facilities totaling $237 million and a subordinated debt facility in the amount of $15 million. The senior debt represents approximately 60% leverage for the project. The debt facility is drawn pro rata with equity contributions. Up to completion of the project financing we funded the construction costs for the project with equity contributions and at the completion of the financing contributions made in excess of our pro rata funding requirements were returned to Methanex. At December 31, 2002 our share of the amount drawn on the debt facilities was $98 million. Our remaining equity contribution to complete the construction of Atlas is approximately $50 million.

Capital expenditures for Chile IV during the fourth quarter of 2002 were $9 million. As at December 31, 2002, total capital expenditures for the project, including $3 million in expenditures incurred in 2001, were $26 million.

During the fourth quarter of 2002 we paid a quarterly dividend of $0.05 per share, or $6 million.

We have excellent financial capacity and flexibility. Our cash balance at December 31, 2002 was $421 million. We also have an undrawn $291 million credit facility. As a result of this financial strength, on January 27, 2003, we declared a special dividend of $0.25 per share, or approximately $31 million. The planned capital maintenance expenditure program directed towards major maintenance, turnarounds and catalyst changes is estimated to total approximately $80 million for the period to the end of 2005. We have the financial capacity to complete the capital maintenance spending program, pay the special dividend, fund the remaining equity contribution for Atlas, complete the construction of Chile IV and pursue new opportunities to enhance our strategic position in methanol.

Short-term Outlook

Supply disruptions continue to result in extremely tight methanol market conditions, low inventory levels and increased prices. In addition, we do not expect any new supply capacity to impact the market in 2003. There continues to be uncertainty concerning the level of production in 2003 from our New Zealand facilities. However, a loss of a significant portion of our production capacity in a global market that is already well balanced may lead to a tighter supply/demand balance and an extension of the period of strong prices. In this environment, we will continue to focus on maximizing the value generated from our low cost facilities and global market position. The methanol price, however, will ultimately depend on industry operating rates and the strength of global demand. We believe that our excellent financial position and financial flexibility, outstanding global supply network and low cost position will ensure that Methanex continues to be the leader in the methanol industry.

January 27, 2003

Supplemental Earnings Measures

In addition to providing measures in accordance with Canadian Generally Accepted Accounting Principles (GAAP), Methanex presents certain supplemental earnings measures. These are EBITDA, Income (loss) before unusual items (after-tax) and Basic income (loss) before unusual items (after-tax) per share. These measures do not have any standardized meaning prescribed by GAAP and therefore are unlikely to be comparable to similar measures presented by other companies. The supplemental earnings measures are provided to assist readers in evaluating the operating performance of the Company's ongoing business. The supplemental earnings measures should be considered in addition to, and not as a substitute for, operating income (loss), net income (loss), cash flows and other measures of financial performance reported in accordance with GAAP.

Income (loss) before Unusual Items (after-tax) and Basic Income (loss) before Unusual Items (after-tax) Per Share

These supplemental earnings measures are provided to assist readers in comparing earnings from one period to another without the impact of unusual items that are considered to be non-operational and/or non-recurring. Income (loss) before unusual items (after-tax) differs from net income because it does not include the after-tax impact of asset restructuring charges and other unusual items. Basic income (loss) before unusual items (after-tax) per share has been calculated by dividing income (loss) before unusual items (after-tax) by the weighted average number of common shares outstanding.

EBITDA

This supplemental earnings measure is provided to assist readers in determining the ability of Methanex to generate cash from operations. EBITDA differs from cash flows from operating activities before changes in non-cash working capital and the utilization of prepaid natural gas primarily because it does not include cash flows from interest, income taxes, asset restructuring charges and other unusual items.

Reconciliation

The following table shows a reconciliation of net income (loss) to income (loss) before unusual items (after-tax) and to EBITDA:

 
                                 Three      Three
                                months     months       Year       Year
                                 ended      ended      ended      ended 
                              December   December   December   December
                                    31,        31,        31,        31,
($ thousands)                     2002       2001       2002       2001
------------------------------------------------------------------------
Net income (loss)             $(30,382) $ (12,954) $  26,414   $ 71,418
Add (deduct) unusual items:                                      
 Asset restructuring charge    115,387          -    115,387     11,060
 Site restoration adjustment   (26,972)         -    (26,972)         -
 Income tax expense (recovery)
  related to the unusual items  (2,700)         -     (2,700)         -
------------------------------------------------------------------------
Income (loss) before unusual
 items (after-tax)            $ 55,333  $ (12,954) $ 112,129  $  82,478
Add (deduct):                                                    
 Income tax expense (recovery)
  excluding the amounts related
  to unusual items              13,325     (9,252)    27,611     29,347
 Interest expense                5,945      7,153     28,972     31,848
 Interest and other income      (1,665)    (6,552)   (10,365)   (19,028)
 Depreciation and amortization  26,084     30,184    111,289    113,719
------------------------------------------------------------------------
EBITDA                        $ 99,022  $   8,579  $ 269,636  $ 238,364
------------------------------------------------------------------------



Methanex Corporation                                        
                                        
                                        
Consolidated Statements of Income 
                                3 months ended           Years ended
(unaudited)                       December 31            December 31
-----------------------------------------------------------------------
(thousands of U.S. dollars,
 except number of shares
 and per share amounts)         2002      2001        2002        2001
                                                                  
                                                                  
Revenue                    $ 306,993 $ 195,335 $ 1,008,792 $ 1,148,965
                                                                  
Cost of sales and
 operating expenses          207,971   186,756     739,156     910,601
Depreciation and
 amortization                 26,084    30,184     111,289     113,719
-----------------------------------------------------------------------
Operating income (loss)
 before undernoted items      72,938   (21,605)    158,347     124,645
                                                                  
Interest expense (note 8)     (5,945)   (7,153)    (28,972)    (31,848)
Interest and other income      1,665     6,552      10,365      19,028
Asset restructuring charge
 (note 9)                   (115,387)        -    (115,387)    (11,060)
Site restoration adjustment
 (note 10)                    26,972         -      26,972           -
-----------------------------------------------------------------------
Income (loss) before
 income taxes                (19,757)  (22,206)     51,325     100,765
                                                                  
Income tax recovery
 (expense)                   (10,625)    9,252     (24,911)    (29,347)
-----------------------------------------------------------------------
Net income (loss)          $ (30,382)$ (12,954)$    26,414 $    71,418
                                                                  
Retained earnings,
 beginning of period         423,532   413,110     397,310     384,832
Excess of repurchase price
 over assigned value of
 common shares                     -    (2,846)    (24,349)    (58,940)
Dividend payments             (6,282)        -     (12,507)          -
-----------------------------------------------------------------------
Retained earnings, end of
 period                    $ 386,868 $ 397,310 $   386,868 $   397,310
                                                                  
-----------------------------------------------------------------------
Weighted average number
 of common shares
 outstanding*            125,183,497           126,610,754
                                   132,560,277             154,355,808
Diluted weighted average
 number of common shares
 outstanding*            125,183,497           128,801,974
                                   132,560,277             155,965,293
                                                                  
Basic net income (loss)
 per common share          $   (0.24)$   (0.10)$      0.21 $     0.46
Diluted net income (loss)
 per common share          $   (0.24)$   (0.10)$      0.21 $     0.46
                                                                  
                                                                  
* number of common shares outstanding at December 31, 2002: 125,651,639
 (December 31, 2001: 131,167,942)                                      



Methanex Corporation                                    
                                    
                                    
Consolidated Balance Sheets              December 31       December 31
(unaudited)                                     2002              2001
------------------------------------------------------------------------
(thousands of U.S. dollars)                                       
                                                                  
Assets                                                            
                                                                  
Current assets:                                                   
 Cash and cash equivalents               $   421,387       $   332,129
 Receivables                                 201,037           135,219
 Inventories                                 119,125            99,908
 Prepaid expenses                             12,079             8,685
------------------------------------------------------------------------
                                             753,628           575,941
                                                                  
Property, plant and equipment (note 1)       979,935         1,031,716
                                                                  
Other assets                                  85,748            85,693
------------------------------------------------------------------------
                                         $ 1,819,311       $ 1,693,350
------------------------------------------------------------------------
Liabilities and Shareholders' Equity                      
                                                                  
Current liabilities:                                              
 Accounts payable and accrued
  liabilities                            $   136,036       $   110,281
 Current maturities on
  long-term debt and other
  long-term liabilities                        6,078           154,693
------------------------------------------------------------------------
                                             142,114           264,974
                                                                  
Limited recourse long-term debt (note 3)      97,578                 -
                                                                  
Long-term debt (note 4)                      449,646           249,535
                                                                  
Other long-term liabilities                   52,980            78,911
                                                                  
Future income taxes                          172,915           164,469
                                                                  
Shareholders' equity:                                             
 Capital stock (note 5)                      517,210           538,151
 Retained earnings                           386,868           397,310
------------------------------------------------------------------------
                                             904,078           935,461
------------------------------------------------------------------------
                                         $ 1,819,311       $ 1,693,350
------------------------------------------------------------------------



Methanex Corporation                                   
                                   
                                   
Consolidated Statements of Cash Flows  
                                3 months ended           Years ended
(unaudited)                       December 31            December 31
-----------------------------------------------------------------------
(thousands of U.S. dollars)
                               2002       2001        2002        2001
Cash flows from operating
 activities:                                                     
Net income (loss)          $(30,382)  $(12,954)    $26,414     $71,418
Add (deduct):                                                    
 Depreciation and
  amortization               26,084     30,184     111,289     113,719
 Future income taxes          4,466     (2,190)      8,446      22,162
 Asset restructuring charge
  (note 9)                  115,387          -     115,387           -
 Site restoration
  adjustment (note 10)      (26,972)         -     (26,972)          -
 Other                        3,162      2,541      10,030      12,130
-----------------------------------------------------------------------
                                                                 
Cash flows from operating
 activities before
 undernoted changes          91,745     17,581     244,594     219,429
                                                                 
Refund of income tax deposit      -     21,191           -      66,866
Receivables and accounts
 payable and accrued
 liabilities                  4,557      9,461     (33,521)     47,958
Inventories and prepaid
 expenses                    (8,826)    16,531     (22,998)     41,158
Utilization of prepaid natural
 gas                           (240)      (181)      2,034       1,045
-----------------------------------------------------------------------
                             87,236     64,583     190,109     376,456
-----------------------------------------------------------------------
Cash flows from financing
 activities:                                                     
Proceeds on issue of
 long-term debt                   -          -     200,000           -
Proceeds on issue of limited
 recourse long-term debt     97,578          -      97,578           -
Financing costs              (5,996)         -     (11,772)          -
Repayment of long-term debt       -          -    (150,000)          -
Payment for shares repurchased    -   (187,620)    (55,974)   (187,620)
Issue of shares on exercise of
 incentive stock options      4,723          6      10,684       6,428
Dividend payments            (6,282)         -     (12,507)          -
Repayment of other long-term
 liabilities                 (3,245)    (1,123)     (8,352)     (6,359)
-----------------------------------------------------------------------
                             86,778   (188,737)     69,657    (187,551)
-----------------------------------------------------------------------
Cash flows from investing
 activities:                                                     
Plant and equipment under
 development                (29,190)   (26,873)   (142,245)    (68,460)
Property, plant and
 equipment                  (10,542)    (8,926)    (17,913)    (22,882)
Accounts payable and
 accrued liabilities
 related to capital
 expenditures                   (56)    12,687      (6,542)     12,137
Other assets                 (1,191)    (3,456)     (3,808)     (3,513)
-----------------------------------------------------------------------
                            (40,979)   (26,568)   (170,508)    (82,718)
-----------------------------------------------------------------------
Increase (decrease) in cash
 and cash equivalents       133,035   (150,722)     89,258     106,187
Cash and cash equivalents,
 beginning of period        288,352    482,851     332,129     225,942
-----------------------------------------------------------------------
Cash and cash equivalents,
 end of period            $ 421,387  $ 332,129   $ 421,387   $ 332,129
-----------------------------------------------------------------------
                                                                 
Supplementary cash
 flow information:                         
-----------------------------------------------------------------------
Interest paid, net of
 capitalized interest     $       -  $     107   $  21,641   $  30,957
Income taxes paid
 (received)               $   3,035  $ (11,797)  $   3,147   $    (244)
-----------------------------------------------------------------------



Methanex Corporation
Notes to Consolidated Financial Statements 
(unaudited)
Year ended December 31, 2002

The consolidated financial statements are prepared in accordance with generally accepted accounting principles in Canada. The consolidated financial statements have been prepared from the books and records without audit, however, in the opinion of management, all adjustments which are necessary to the fair presentation of the results of the interim period have been made.

These consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Methanex 2001 Annual Report. Except with respect to the change in accounting policy described in note 7(c), the accounting policies applied in these interim consolidated financial statements are consistent with those applied in the Annual Report.

1. Property, Plant and Equipment

                                               Accumulated     Net Book
($ thousands)                         Cost    Depreciation        Value
------------------------------------------------------------------------
December 31, 2002                                
Plant                          $ 2,111,575     $ 1,363,277  $   748,298
Plant and equipment under
 development                       210,703               -      210,703
Other                               41,550          20,616       20,934
------------------------------------------------------------------------
                               $ 2,363,828     $ 1,383,893  $   979,935
------------------------------------------------------------------------
December 31, 2001                                                
Plant                          $ 2,123,853     $ 1,179,372  $   944,481
Plant and equipment under
 development                        68,460               -       68,460
Other                               35,253          16,478       18,775
------------------------------------------------------------------------
                               $ 2,227,566     $ 1,195,850  $ 1,031,716
------------------------------------------------------------------------

Increluded in property, plant and equipment is the idled Medicine Hat Plant 3 which is being maintained in a position to restart if conditions warrant this course of action. At December 31, 2002 this facility had a net book value of $65 million (December 31, 2001 - $76 million).

2. Interest in Atlas Joint Venture

The Company has a 63.1% joint venture interest in Atlas Methanol Company ("Atlas"). The joint venture is constructing a 1.7 million tonne per year methanol plant in Trinidad. Construction is expected to be completed in early 2004.

The consolidated financial statements include the following amounts representing the Company's interest in the Atlas joint venture:

                                      December 31,          December 31,
($ thousands)                                2002                  2001
------------------------------------------------------------------------
Consolidated Balance Sheets
 Cash and cash equivalents                $ 7,168               $ 1,343
 Other current assets                       1,349                   652
 Property, plant and equipment            161,808                63,131
 Other assets                               5,996                     -
 Current liabilities                        3,847                 7,690
 Limited recourse long-term debt (note 3)  97,578                     -
------------------------------------------------------------------------



                                 Three      Three
                                months     months       Year       Year
                                 ended      ended      ended      ended 
                              December   December   December   December
                                    31,        31,        31,        31,
($ thousands)                     2002       2001       2002       2001
------------------------------------------------------------------------
Consolidated Statements of
 Cash Flows
 Cash inflows from financing
  activities                  $ 97,578    $     -   $ 97,578    $     -
 Cash outflows from investing
  activities                    19,741     34,468    108,516     55,441
------------------------------------------------------------------------

To December 31, 2002, the joint venture had no revenue and all expenditures were capitalized.

Atlas completed limited recourse project financing in December 2002. The Company has recorded $98 million of limited recourse long-term debt representing the Company's proportionate share of the project financing received to December 31, 2002. The terms of the limited recourse long-term debt are described in note 3.

The Company estimates that its remaining share of capital expenditures to complete the construction of Atlas will be approximately $115 million. The Company expects that these expenditures will be funded from cash generated from operations, cash and cash equivalents and the proceeds from project financing. The Company estimates that its remaining equity contribution to complete the construction of Atlas is approximately $50 million.

3. Limited Recourse Long-term Debt

The consolidated financial statements include the Company's proportionate share of limited recourse long-term debt of the Atlas joint venture. These loans are described as limited recourse as they are secured only by the assets of the Atlas joint venture. The Company's proportionate share of the total limited recourse facility is $159 million and will be utilized to fund the construction of Atlas pro rata with equity contributions. The terms of the limited recourse long-term debt facility and the Company's proportionate share of the limited recourse long-term debt issued as at December 31, 2002 are as follows:

                                                                Balance,
                                                            December 31,
                                                                   2002
                                                           ($ thousands)
------------------------------------------------------------------------
a) Senior commercial bank loan facility to a maximum
   amount of $71 million with interest rates based on
   LIBOR plus a spread ranging from 2.25% to 2.75%.
   Principal will be paid in twelve semi-annual payments
   commencing six months after the earlier of completion
   of construction and December 31, 2004.                      $ 43,513

b) Senior secured notes to a maximum amount of $63 million
   bearing an interest rate based on the yield to maturity
   on a ten-year U.S. treasury security plus 3.85% with
   semi-annual interest payments. Principal will be paid in
   nine semi-annual payments commencing six years after the
   earlier of completion of construction and December 31, 2004.  38,432

c) Senior fixed rate bonds to a maximum amount of $15 million
   bearing an interest rate of 8.25% with semi-annual interest
   payments. Principal will be paid in four semi-annual
   payments commencing eleven years after the earlier of
   completion of construction and December 31, 2004.              9,825

d) Subordinated loans to a maximum amount of $9 million
   with an interest rate based on LIBOR plus a spread ranging
   from 2.25% to 2.75%. Principal will be paid in twenty
   semi-annual payments commencing six years after the earlier
   of completion of construction and December 31, 2004.           5,808
------------------------------------------------------------------------
                                                               $ 97,578
------------------------------------------------------------------------

Interest costs incurred during construction are capitalized to property, plant and equipment.

4. Long-term Debt

On June 19, 2002 the Company issued 8.75% senior notes due August 15, 2012 in an aggregate principal amount of $200 million.

On August 15, 2002 the Company repaid upon maturity $150 million of long-term debt.

5. Capital Stock

a) Changes in the capital stock of the Company during the period January 1, 2002 to December 31, 2002 were as follows:

                                             Number of    Consideration
                                         Common Shares     ($ thousands)
------------------------------------------------------------------------
Balance, December 31, 2001                 131,167,942        $ 538,151
Issued on exercise of stock options          1,113,250            5,961
Shares repurchased                          (7,708,000)         (31,625)
------------------------------------------------------------------------
Balance, September 30, 2002                124,573,192        $ 512,487
Issued on exercise of stock options          1,078,447            4,723
------------------------------------------------------------------------
Balance, December 31, 2002                 125,651,639        $ 517,210
------------------------------------------------------------------------

During the year ended December 31, 2002, the Company repurchased for cancellation 7.7 million common shares. The cost to acquire the shares in the amount of $56.0 million was allocated $31.6 million to capital stock and $24.4 million to retained earnings.

b) On June 14, 2002 the Company completed a solicitation of consents to an amendment to the indenture to modify the limitation on restricted payments covenant relating to our 7.75% notes due August 15, 2005. Under the indenture, the Company can pay cash dividends or make other shareholder distributions to the extent that shareholders' equity is equal to or greater than $850 million after giving effect to such payment or distribution. The indenture has been amended to permit the Company to declare and pay up to $30 million of dividends in any twelve-month period while shareholders' equity is less than $850 million.

6. Net Income Per Share

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

                                 Three      Three
                                months     months       Year       Year
                                 ended      ended      ended      ended 
                              December   December   December   December
                                    31,        31,        31,        31,
                                  2002       2001       2002       2001
------------------------------------------------------------------------
Denominator for basic net
 income per share          125,183,497           126,610,754
                                      132,560,277           154,355,808
Effect of dilutive stock
 options                             -          -   2,191,220 1,609,485
------------------------------------------------------------------------
Denominator for diluted
 net income per share      125,183,497            128,801,974
                                      132,560,777           155,965,293
------------------------------------------------------------------------

7. Stock Options

(a) Incentive stock options:

Common shares reserved for incentive stock options at December 31, 2002 were as follows:

                            Options denominated     Options denominated
                                 in CAD$                  in US$
                          Number of    Weighted   Number of    Weighted
                              Stock     Average       Stock     Average
                            Options    Exercise     Options    Exercise
                                          Price                   Price
------------------------------------------------------------------------
Outstanding at
 December 31, 2001        8,690,750     $ 10.09           -      $    -
Granted                           -           -   2,464,000        6.46
Exercised                (1,113,250)       8.36           -           -
Cancelled                   (52,525)      10.88           -           -
------------------------------------------------------------------------
Outstanding at
 September 30, 2002       7,524,975     $ 10.34   2,464,000     $  6.46
Granted                           -           -      10,000        8.79
Exercised                  (615,647)       8.40           -           -
Cancelled                   (61,000)       8.97     (42,000)       6.45
------------------------------------------------------------------------
Outstanding at
 December 31, 2002        6,848,328     $ 10.53   2,432,000     $  6.47
------------------------------------------------------------------------

As at December 31, 2002, 4,985,566 incentive stock options had vested and were exercisable at an average price of CAD $11.42.

(b) Performance stock options:

Performance stock options at December 31, 2002 were as follows:

Performance stock options denominated in CAD$
                                         Number of     Average Exercise
                                     Stock Options                Price
------------------------------------------------------------------------
Outstanding at December 31, 2001         2,125,000               $ 4.47
Exercised                                 (462,800)                4.47
------------------------------------------------------------------------
Outstanding at December 31, 2002         1,662,200               $ 4.47
------------------------------------------------------------------------

The vesting of the performance stock options is tied to the market value of the Company's common shares subsequent to the date of grant. After September 30, 2002, approximately one-third of the options vest if the common shares have traded at or above CAD $10 per share subsequent to the date of grant; a further one-third vest if the common shares have traded at or above CAD $15 per share subsequent to the date of grant and the options are fully vested if the common shares have traded at or above CAD $20 per share subsequent to the date of grant. On October 1, 2002, 699,000 options vested and became exercisable as the common shares had traded above CAD $10 per share subsequent to the date of grant. As at December 31, 2002, 236,200 outstanding performance stock options had vested and were exercisable at a price of CAD $4.47.

7. Stock Options (continued)

(c) Fair value method disclosure:

Effective January 1, 2002, the Company adopted the new recommendations of the Canadian Institute of Chartered Accountants with respect to the accounting for stock-based compensation and other stock-based payments. The new recommendations require equity instruments awarded to employees and the cost of the service received as consideration to be measured and recognized based on an estimate of the fair value of the equity instruments issued. Compensation expense is recognized over the period of related employee service, usually the vesting period of the equity instrument awarded. The new recommendations permit the measurement of compensation expense for stock option grants to employees and directors that are not direct awards of stock, stock appreciation rights or otherwise call for settlement in cash or other assets by a method other than a fair value based method and to provide pro forma disclosure of the financial results as if a fair value based accounting method had been used.

The Company has elected to continue with the former accounting policy of recognizing no compensation expense when stock options are granted and to provide pro forma disclosure as if a fair value based accounting method had been used. The Company uses the Black-Scholes option pricing model to estimate the fair value of each stock option grant.

The pro forma net income (loss) and net income (loss) per share for the three-month period ended December 31, 2002 and the year ended December 31, 2002 are as follows:

($ thousands, except per share amounts)
                                       Three months             Year
                                              ended            ended
                                        December 31,     December 31,
                                               2002             2002
-----------------------------------------------------------------------
Net income (loss) - as reported             (30,382)          26,414
Net income (loss) - pro forma               (31,417)          22,970
Net income (loss) per share - as reported     (0.24)            0.21
Net income (loss) per share - pro forma       (0.25)            0.18
-----------------------------------------------------------------------

The pro forma amounts exclude the effect of stock options granted prior to January 1, 2002. The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 5%, dividend yield of 0%, expected life of 5 years, and volatility of 35%.

The weighted average fair value of stock options granted during the year ended December 31, 2002 was $2.46 per share.

8. Interest Expense

($ thousands)
                                 Three      Three
                                months     months       Year       Year
                                 ended      ended      ended      ended 
                              December   December   December   December
                                    31,        31,        31,        31,
                                  2002       2001       2002       2001
------------------------------------------------------------------------
Interest expense before
 capitalized interest          $ 9,768    $ 8,191   $ 38,314   $ 32,886
Less: capitalized interest      (3,823)    (1,038)    (9,342)    (1,038)
------------------------------------------------------------------------
Interest expense               $ 5,945    $ 7,153   $ 28,972   $ 31,848
------------------------------------------------------------------------

9. Asset Restructuring Charge

($ thousands)
                                 Three      Three
                                months     months       Year       Year
                                 ended      ended      ended      ended 
                              December   December   December   December
                                    31,        31,        31,        31,
                                  2002       2001       2002       2001
------------------------------------------------------------------------
Write-down of property,
 plant and equipment        $ 108,704   $       -  $ 108,704  $       -
Other                           6,683           -      6,683     11,060
------------------------------------------------------------------------
                            $ 115,387   $       -  $ 115,387  $  11,060
------------------------------------------------------------------------

During the fourth quarter of 2002, the Company recorded an asset restructuring charge related to the write-off of the Fortier, Louisiana methanol facility. The asset restructuring charge is comprised of a $108.7 million write-down of property, plant and equipment and $6.7 million of other associated costs.

In 2001, the Company recorded an $11 million asset restructuring charge related primarily to employee severance and mothball costs for the shutdown of the Medicine Hat Plant.

10. Site Restoration Adjustment

During the fourth quarter of 2002, after completing a comprehensive review and analysis to update the previous estimate, the Company recorded a $27 million reduction in the accrual for site restoration for our New Zealand facilities.

11. New Zealand Natural Gas

The Maui natural gas field is currently the primary gas supply source for the Company's New Zealand plants. A contractual process initiated in December 2001 to re-determine the economically recoverable natural gas reserves of the Maui field is continuing. The independent expert, who was appointed by the parties to the Maui gas contract, has released a draft determination report and a final report is expected to be released in early 2003. As part of the re-determination process, the Company filed a submission commenting on the draft determination report.

The independent expert's draft determination of economically recoverable reserves is significantly lower than estimates that were prepared by consultants that the Company retained. If the findings in the draft report are confirmed in the final determination, Methanex would lose substantially all of its remaining contractual natural gas entitlements from the Maui field. This would result in a substantial near-term reduction in the current production capability of the New Zealand plants unless additional gas can be contracted from other sources.

The Company is continuing to pursue acquisitions of additional gas to supply the New Zealand plants. However, there can be no assurance that we will be able to secure additional gas in New Zealand on commercially acceptable terms and that the New Zealand operations will generate sufficient cash to recover their carrying value.

12. Commitment

Under an agreement with Lyondell, the Company will acquire Lyondell's customer list and a number of customer contracts in North America for $10 million. The agreement is effective January 1, 2004 and the payment is due in June 2003.

13. Subsequent Event

On January 27, 2003, the Company declared a special dividend of $0.25 per share, or approximately $31 million, payable on February 14, 2003 to shareholders of record on February 6, 2003.

Quarterly History                                            
(unaudited)                        2002      Q4      Q3      Q2      Q1
-------------------------------------------------------------------------
Methanol sales volume                                                
(thousands of tonnes)                                                
                                                                     
 Company produced product         5,686   1,347   1,419   1,489   1,431
 Purchased product                  809     278     207     129     195
 Commission sales(1)                725     197     188     183     157
------------------------------------------------------------------------
                                  7,220   1,822   1,814   1,801   1,783
------------------------------------------------------------------------
Methanol production                                                  
(thousands of tonnes)                                                
                                                                     
 North America                      478     126     125     103     124
                                                                     
 New Zealand                      2,281     552     593     601     535
                                                                     
 Chile                            2,932     735     748     743     706
------------------------------------------------------------------------
                                  5,691   1,413   1,466   1,447   1,365
------------------------------------------------------------------------
Methanol price(2)                                                    
 ($/tonne)                          155     188     182     138     111
 ($/gallon)                        0.47    0.57    0.55    0.42    0.33
                                                                     
Per share information                                                
 Net income (loss)               $ 0.21   (0.24)   0.47    0.12   (0.13)



Quarterly History                                            
(unaudited)                        2001      Q4      Q3      Q2      Q1
-------------------------------------------------------------------------
Methanol sales volume                                                
(thousands of tonnes)                                                
                                                                     
 Company produced product         5,390   1,522   1,327   1,296   1,245
 Purchased product                1,280     170     301     404     405
 Commission sales(1)                720     169     184     146     221
------------------------------------------------------------------------
                                  7,390   1,861   1,812   1,846   1,871
------------------------------------------------------------------------
Methanol production                                                  
(thousands of tonnes)                                                
                                                                     
 North America                      445     127     123      93     102
                                                                     
 New Zealand                      2,133     592     520     447     574
                                                                     
 Chile                            2,783     662     710     708     703
------------------------------------------------------------------------
                                  5,361   1,381   1,353   1,248   1,379
------------------------------------------------------------------------
Methanol price(2)                                                    
 ($/tonne)                          172     115     147     200     225
 ($/gallon)                        0.52    0.35    0.44    0.60    0.68
                                                                     
Per share information                                                
 Net income (loss)                 0.46   (0.10)  (0.15)   0.25    0.43



Quarterly History                                            
(unaudited)                        2000      Q4      Q3      Q2      Q1
-------------------------------------------------------------------------
Methanol sales volume                                                
(thousands of tonnes)                                                
                                                                     
 Company produced product         5,815   1,324   1,398   1,548   1,545
 Purchased product                  814     305     245     133     131

 Commission sales(1)                142     142       -       -       -
------------------------------------------------------------------------
                                  6,771   1,771   1,643   1,681   1,676

------------------------------------------------------------------------
Methanol production                                                  
(thousands of tonnes)                                                
                                                                     
 North America                      685     108     114     223     240
                                                                     
 New Zealand                      2,410     593     620     607     590

                                                                     
 Chile                            2,912     716     666     778     752
------------------------------------------------------------------------
                                  6,007   1,417   1,400   1,608   1,582
------------------------------------------------------------------------
Methanol price(2)                                                    
 ($/tonne)                          160     202     187     141     112
 ($/gallon)                        0.48    0.61    0.56    0.42    0.34
                                                                     
Per share information                                                
 Net income (loss)                 0.85    0.40    0.35    0.17   (0.06)

1 Sales of product from Titan plant in Trinidad.  
  Methanex markets 100% of Titan product.
2 Produced and purchased product.



FOR FURTHER INFORMATION PLEASE CONTACT:

Methanex Corporation
Chris Cook
Manager, Investor Relations
(604) 661-2600 or Toll Free: 1-800-661-8851

or

Methanex Corporation
Brad Boyd
Corporate Controller and Director, Investor Relations
(604) 661-2600 or Toll Free: 1-800-661-8851
Website: www.methanex.com