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Methanex Completes Highly Profitable Year-Momentum into 2005 Remains Strong

January 26, 2005

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 26, 2005) - Methanex Corporation (TSX:MX)(NASDAQ:MEOH) recorded net income of US$66.1 million (US$0.55 per share) and generated EBITDA(1) of US$120.8 million for the fourth quarter ended December 31, 2004. This compares to a net loss in the fourth quarter of 2003 of US$111.7 million (US$0.93 per share) and EBITDA of US$81.6 million. Excluding unusual items related to non-cash asset restructuring charges, the Company reported income before unusual items (after-tax) of US$27.7 million (US$0.23 per share) for the fourth quarter of 2003.

For the year ended December 31, 2004, net income was US$236.4 million (US$1.95 per share) and EBITDA was US$434.4 million. In 2003, income before unusual items (after-tax) was US$180.6 million (US$1.47 per share) and EBITDA was US$386.5 million. After unusual items, the Company reported net income for the year ended December 31, 2003 of US$1.4 million (US$0.01 per share).

Bruce Aitken, President and CEO of Methanex commented, "2004 has been a record year for us with the highest ever sales volumes and EBITDA per share. Tight methanol supply/demand conditions continued in the fourth quarter resulting in further price strengthening. Our average realized price for the fourth quarter of 2004 was US$248 per tonne compared with US$245 per tonne for the previous quarter and US$204 per tonne for the fourth quarter of 2003. As we enter 2005, the market remains tight, with global Methanex reference prices ranging from US$300 to $316 per tonne (US$0.90 - $0.95 per gallon) before discounts."

Mr. Aitken continued, "The 1.7 million tonne per year Atlas methanol facility in Trinidad, in which we have a 63.1% interest, commenced production in the third quarter of 2004 and has operated near capacity during the fourth quarter. In Chile, we expect to start up our new 840,000 tonne per year plant at the end of the first quarter of 2005. Together, these two new plants will represent a step-change in our cost structure and will enhance our ability to generate cash throughout the methanol price cycle."

Mr. Aitken added, "Looking ahead, we remain optimistic that tight market conditions and above average methanol pricing will continue in 2005. We expect that the impact of planned methanol capacity additions in 2005 should be largely offset by further industry restructuring and increased demand."

Mr. Aitken concluded, "In May 2004 our Board of Directors approved a normal course issuer bid for 5% of our total outstanding shares and in November approved an increase in this bid raising the maximum allowable repurchase to 12.2 million shares, or 10% of the public float. As at the end of 2004 a total of 6.1 million shares have been repurchased at an average share price of US$13.95. With US$210 million cash on hand at the end of 2004 and a US$250 million undrawn credit facility, we have the financial capacity to complete Chile IV and our capital maintenance spending program, pursue new opportunities to enhance our strategic position in the methanol industry and continue to deliver on our commitment to maintain a prudent balance sheet and return excess cash to shareholders."

A conference call is scheduled for Thursday, January 27 at 11:00 am EST (8:00 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 passcode for the call is 75577. A playback version of the conference call will be available for seven days at (877) 653-0545. The reservation number for the playback version is 261994. There will be a simultaneous audio-only webcast of the conference call, which can be accessed from our website at www.methanex.com.

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

(1) EBITDA is a non-GAAP measure. For a discussion and reconciliation to the most comparable GAAP measure refer to "Additional Information - Supplemental Non-GAAP Measures" included in the attached Interim Report.

Information in this news release and the attached management's discussion and analysis may contain forward-looking statements. By their nature, such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. They include world-wide economic conditions, actions of competitors, the availability and cost of gas feedstock, the ability to implement business strategies and pursue business opportunities, conditions in the methanol and other industries including the supply and demand for methanol and the risks attendant with producing and marketing methanol, integrating acquisitions and realizing anticipated synergies and carrying out major capital expenditure projects. Please also refer to page 43 of our 2003 Annual Report for more information on forward-looking statements.


Interim Report

For the year ended December 31, 2004

At January 25, 2005, the Company had 119,991,067 common shares issued
and outstanding and stock options exercisable for 1,179,063
additional common shares.

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

Transfer Agents & Registrars
CIBC Mellon Trust Company
320 Bay Street
Toronto, Ontario, Canada M5H 4A6
Toll free in North America:
1-800-387-0825

Investor Information
All financial reports, news releases and corporate information can be
accessed on our web site at www.methanex.com.

Contact Information
Methanex Investor Relations
1800 - 200 Burrard Street
Vancouver, BC Canada V6C 3M1

E-mail: invest@methanex.com
Methanex Toll-Free: 1-800-661-8851


FOURTH QUARTER MANAGEMENT'S DISCUSSION AND ANALYSIS
Except where otherwise noted, all currency amounts are stated in
United States dollars.

This fourth quarter 2004 Management's Discussion and Analysis
should be read in conjunction with the 2003 annual consolidated
financial statements and the Management's Discussion and Analysis
included in the Methanex 2003 Annual Report. The Methanex 2003
Annual Report and additional information relating to Methanex is
available on SEDAR at www.sedar.com.

                               THREE MONTHS ENDED(1)   YEARS ENDED(1)
                             ---------------------------------------
($ millions, except          DEC 31  SEP 30  DEC 31   DEC 31  DEC 31
where noted)                   2004    2004    2003     2004    2003
--------------------------------------------------------------------
Sales volumes (thousands
 of tonnes)
  Company produced            1,531   1,307   1,328    5,298   4,933
  Purchased                     402     423     399    1,960   1,392
  Commission sales(2)           128      41       -      169     254
--------------------------------------------------------------------
                              2,061   1,771   1,727    7,427   6,579
Average realized methanol
 price ($ per tonne)(3)         248     245     204      234     220
Net income (loss)              66.1    71.2  (111.7)   236.4     1.4
Income before unusual items
 (after-tax)(4)                66.1    71.2    27.7    236.4   180.6
Operating income               98.9   105.7    54.4    355.7   290.4
Cash flows from operating
 activities(5)                103.5   108.7    63.3    374.7   330.4
EBITDA(6)                     120.8   125.9    81.6    434.4   386.5
Basic net income (loss) per
 common share ($ per share)    0.55    0.59   (0.93)    1.95    0.01
Diluted net income (loss) per
 common share ($ per share)    0.54    0.58   (0.93)    1.92    0.01
Basic income per share before
 unusual items (after-tax)(4)
 ($ per share)                 0.55    0.59    0.23     1.95    1.47
Number of common shares
 outstanding, end of period
 (millions of shares)         120.0   120.0   120.0    120.0   120.0
Weighted average number of
 common shares outstanding
 (millions of shares)         120.4   121.6   119.7    121.5   123.0
--------------------------------------------------------------------
(1) The 2003 financial results have been restated to reflect the
    retroactive adoption on January 1, 2004 of the new
    recommendations of the Canadian Institute of Chartered
    Accountants (CICA) related to asset retirement obligations and
    stock-based compensation. Refer to note 1 of the attached
    consolidated financial statements.
(2) Revenue includes the commission earned on sales of the 36.9% of
    production from Atlas that we do not own. Commission sales volume
    in 2003 represents commission sales of production from Titan
    Methanol Company prior to our acquisition of Titan effective
    May 1, 2003.
(3) Average realized price presented in the above table is calculated
    net of inland shipping and handling costs billed to customers.
    For financial statement presentation purposes, these amounts
    are included in cost of sales. Refer to note 1 of the
    consolidated financial statements.
(4) Income before unusual items (after-tax) and basic income per
    share before unusual items (after-tax) differ from the most
    comparable GAAP measures, net income and basic net income
    (loss) per share because certain transactions considered to be
    non-operational and/or non-recurring have been excluded. Refer
    to Additional Information - Supplemental Non-GAAP Measures.
(5) Before changes in non-cash working capital and the utilization of
    prepaid natural gas.
(6) EBITDA differs from the most comparable GAAP measure, cash flows
    from operating activities, primarily because it does not include
    changes in non-cash working capital, the utilization of prepaid
    natural gas and cash flows related to interest, income taxes and
    unusual items. For a reconciliation of cash flows from operating
    activities to EBITDA, refer to Additional Information
    - Supplemental Non-GAAP Measures.

CONTINUED STRONG FINANCIAL RESULTS

For the fourth quarter of 2004 we recorded EBITDA of $120.8 million and net income of $66.1 million ($0.55 per share). This compares with EBITDA of $125.9 million and net income of $71.2 million ($0.59 per share) for the third quarter of 2004 and EBITDA of $81.6 million and a net loss of $111.7 million for the fourth quarter of 2003. During the fourth quarter of 2003, we recorded before and after-tax non-cash asset restructuring charges of $139.4 million related to the write-down of property, plant and equipment and related assets in New Zealand and Medicine Hat, Alberta. Excluding the impact of the asset restructuring charges, we recorded income before unusual items (after-tax) of $27.7 million for the fourth quarter of 2003.

For the year ended December 31, 2004, we recorded EBITDA of $434.4 million and net income of $236.4 million ($1.95 per share) compared with EBITDA of $386.5 million and income before unusual items (after-tax) of $180.6 million ($1.47 per share). Including the impact of the Medicine Hat and New Zealand asset restructuring charges and the write off of Australia project development costs, we recorded net income of $1.4 million ($0.01 per share) for the year ended December 31, 2003.

EBITDA

The change in EBITDA resulted from:

                                 Q4-2004       Q4-2004          2004
                           COMPARED WITH COMPARED WITH COMPARED WITH
($ millions)                     Q3-2004       Q4-2003          2003
--------------------------------------------------------------------
Higher realized price
 of produced methanol                  3            62            72
Higher total cash cost               (31)          (47)          (84)
Higher sales volume of
 produced methanol                    26            18            35
Higher (lower) margin on
 the sale of purchased methanol       (3)            6            25
--------------------------------------------------------------------
Increase (decrease) in EBITDA         (5)           39            48
--------------------------------------------------------------------

Q4 2004 compared with Q3 2004

Our fourth quarter of 2004 average realized price was $248 per tonne compared with $245 per tonne for the third quarter of 2004. Strong demand and industry supply disruptions have resulted in low global inventories and the continuation of a very strong methanol price environment. This favourable price environment is underpinned by high North American natural gas prices and high global energy prices.

We publish non-discounted reference prices for each major methanol market and offer discounts to customers based on various factors. The methanol industry is highly competitive and prices are affected by supply / demand fundamentals. For the fourth quarter of 2004 our average realized price is approximately 18% lower than our published average non-discounted reference price in the United States for the same period. This compares to approximately 12% lower for the third quarter of 2004. In order to reduce the impact of cyclical pricing on our earnings we have strategically positioned ourselves with certain global customers under long-term contracts where prices are either fixed or linked to our costs plus a margin. The discount has increased as a result of higher methanol prices together with higher volumes sold under these types of arrangements during the fourth quarter of 2004. While the discount from reference prices in the current favourable pricing environment has increased, the discount should narrow during periods of lower pricing. We believe it is important to maintain financial flexibility throughout the methanol price cycle and these strategic contracts are a component of our prudent approach to liquidity.

Our total cash costs for the fourth quarter of 2004 were higher than in the third quarter of 2004 and this decreased EBITDA by $31 million. Approximately $16 million of this increase in costs relates to our New Zealand operations. During the fourth quarter, our favourable New Zealand dollar foreign currency forward contracts expired and this, together with higher natural gas costs, decreased EBITDA by approximately $13 million compared with the third quarter. Also during the fourth quarter we restructured and limited our New Zealand operations to the 500,000 tonne per year Waitara Valley facility. As a result of the restructuring we reduced our workforce and paid severance costs of approximately $3 million. We have positioned our New Zealand operations to be flexible and will continue to critically assess our operating plan during 2005 with consideration given to prevailing market conditions and our ability to generate positive cash margins.

Natural gas purchase contracts for our strategic assets in Chile and Trinidad are linked to methanol prices in order to reduce our commodity price risk exposure and we believe this enables these facilities to be competitive throughout the methanol price cycle. Higher natural gas costs in Chile and Trinidad and other costs impacted by changes in methanol prices decreased EBITDA by approximately $6 million. We also incurred $2 million in costs related to unplanned maintenance during the fourth quarter in Chile and Trinidad. The remaining increase in costs relates primarily to an increase in stock-based compensation expense of $2 million due to an appreciation in our share price and costs for strategic initiatives as we continue to pursue opportunities to enhance our strategic position in the methanol industry.

Our total sales volume of 2.1 million tonnes for the fourth quarter of 2004 was approximately 290,000 tonnes higher than the third quarter. Approximately 40% of this increase relates to new customer contracts with the remaining increase primarily the result of differences in the timing of customer deliveries. Higher sales volumes of produced methanol during the fourth quarter of 2004 increased EBITDA by $26 million compared with the third quarter. We purchase additional methanol produced by others on the spot market or through offtake agreements in order to meet customer needs and support our marketing efforts. Consequently, we realize holding gains or losses on the resale of this product depending on the methanol price at the time of resale. The cost for purchased methanol also includes allocated fixed storage and handling costs of approximately $5 per tonne. During the fourth quarter of 2004, the loss on the sale of purchased methanol was $3 million higher than the third quarter of 2004.

Q4 2004 compared with Q4 2003

The fourth quarter of 2004 average realized price of $248 per tonne is $44 per tonne higher than the average realized price of $204 per tonne for the same period in 2003 and this increased EBITDA by $62 million.

Our total cash costs for the fourth quarter of 2004 were higher than in the fourth quarter of 2003 and this decreased EBITDA by $47 million. Approximately $29 million of this impact relates to higher natural gas costs for our New Zealand operations, including the expiration of favourable New Zealand dollar foreign currency forward contracts and severance costs. We purchase natural gas for our Kitimat facility on a short-term basis and the purchase price is set in a competitive market that can fluctuate widely. Higher North American energy prices increased the natural gas costs of our Kitimat facility by $5 million for the fourth quarter of 2004 compared with the same period in 2003. The cost of natural gas for our strategic facilities in Chile and Trinidad is linked to methanol prices. As a result of higher methanol prices we incurred higher costs for natural gas in Chile and Trinidad and this decreased EBITDA by $8 million for the fourth quarter of 2004 compared with the fourth quarter of 2003. The remaining increase in costs relates primarily to the impact of the increase in our share price on stock-based compensation expense of $3 million and costs incurred to enhance our strategic position in the methanol industry.

The Atlas methanol facility in Trinidad commenced operations during the third quarter of 2004 and has strengthened our strategic asset base. Primarily, as a result of the addition of this new low cost production capacity, our sales volume of produced methanol for the fourth quarter of 2004 was approximately 203,000 tonnes higher than in same period last year and this increased EBITDA by $18 million.

During the fourth quarter of 2004 we sold 402,000 tonnes of purchased methanol and incurred a loss of $6 million compared with a loss of $12 million on the sale of 399,000 tonnes for the fourth quarter of 2003. The cost for purchased methanol includes allocated fixed storage and handling costs of approximately $5 per tonne in 2004 and 2003.

2004 compared with 2003

Tight market conditions as a result of strong demand and industry supply disruptions resulted in a favourable price environment throughout 2004. Our average realized price for the year ended December 31, 2004 was $234 per tonne compared with $220 per tonne for 2003 and this increased EBITDA by $72 million.

Our total cash costs were higher in 2004 compared with 2003 and this decreased EBITDA by $84 million. Approximately 50% of this impact relates to higher costs for our New Zealand operations. Despite the increase in operating costs, our New Zealand operations earned positive cash margins throughout 2004. Higher methanol prices in 2004 compared with 2003 increased the natural gas costs for our facilities in Chile and Trinidad and this decreased EBITDA by $22 million. Natural gas costs for our Kitimat facility were higher in 2004 and this decreased EBITDA by $7 million.

Our share price appreciated by over 60% during 2004 and this increased compensation expense related to restricted and deferred share units by $6 million compared with 2003. Compensation expense for restricted and deferred share units is impacted by movements in our share price with changes in the fair value of the related liability recognized in earnings for the percentage of the requisite service that has been rendered at each reporting date.

Our sales volume of produced methanol in 2004 was higher than 2003 by 365,000 tonnes and this increased EBITDA by $35 million. During the year ended December 31, 2004 we sold 2.0 million tonnes of purchased methanol and incurred a loss of $15 million compared with a loss of $40 million on the sale of 1.4 million tonnes for the same period in 2003.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense for the fourth quarter of 2004 was $22 million compared with $27 million for the fourth quarter of 2003. For the year ended December 31, 2004, depreciation and amortization expense was $79 million compared with $96 million for the same period in 2003. The overall decrease in depreciation expense in 2004 compared with 2003 relates to the lower carrying value of property, plant and equipment due to the write-down of our Medicine Hat and New Zealand production facilities at December 31, 2003.

INTEREST EXPENSE



                              THREE MONTHS ENDED         YEARS ENDED
                              ------------------    ----------------
Interest expense                DEC 31    DEC 31    DEC 31    DEC 31
 ($ millions)                     2004      2003      2004      2003
--------------------------------------------------------------------
Interest expense before
 interest capitalized for
 plant and equipment under
 construction                   $   13    $   17    $   55    $   59
Less capitalized interest:
 Chile IV                           (4)       (2)      (14)       (5)
 Atlas                               -        (5)      (10)      (15)
--------------------------------------------------------------------
Interest expense                $    9    $   10    $   31    $   39
--------------------------------------------------------------------

Capitalized interest relates to the construction of Chile IV and Atlas. The Atlas methanol facility commenced operations at the end of July 2004 and subsequent to this date no interest expense was capitalized.

INTEREST AND OTHER INCOME

Interest and other income for the fourth quarter of 2004 was $2 million compared with $3 million for the fourth quarter of 2003. For the year ended December 31, 2004, interest and other income was $7 million compared with $14 million for the same period in 2003. The decrease in interest and other income relates primarily to decreased foreign exchange gains in 2004 compared with 2003.

INCOME TAXES

The effective income tax rate for the fourth quarter of 2004 was 28% compared with 41% for the fourth quarter of 2003, excluding the impact of unusual items. The effective tax rate for the year ended December 31, 2004 was 29% compared with 32% for the same period in 2003. Our facilities in Trinidad receive preferential tax treatment. Titan has a tax holiday until mid-2005 and the tax rate for Atlas will increase over a ten-year period from 0% to 35%. In addition, our New Zealand and Kitimat operations have previously unrecognized tax loss carryforward balances. Substantially, all of our consolidated income tax expense relates to our operations in Chile, where we record taxes at a rate of 35%.

OPERATING PERFORMANCE

 

QUARTERLY OPERATING Q4-2004 Q3-2004 (thousands of tonnes) CAPACITY PRODUCTION PRODUCTION -------------------------------------------------------------------- Chile 750 690 640 Titan, Trinidad 213 154 176 Atlas, Trinidad (63.1% interest) 268 264 157 New Zealand (i) 363 266 304 Kitimat 125 122 121 -------------------------------------------------------------------- 1,719 1,496 1,398 -------------------------------------------------------------------- (i) Quarterly operating capacity for New Zealand includes only the plants that operated during the fourth quarter of 2004.

 

Our facilities in Chile and the Titan facility in Trinidad were impacted by unplanned shutdowns during the fourth quarter of 2004 and production from these facilities was 120,000 tonnes lower than full operating capacity.

The fourth quarter of 2004 was the first full quarter of production for the 1.7 million tonne per year Atlas methanol facility. During the fourth quarter, our share of production from this facility was near capacity at 264,000 tonnes.

In December 2004, we reduced our operations in New Zealand to the 500,000 tonne per year Waitara Valley plant. We have positioned the New Zealand operations to be flexible and will continue to critically assess our operating plan during 2005 with consideration given to prevailing market conditions and our ability to generate positive cash margins.

As discussed in our third quarter Management's Discussion and Analysis, we suffered curtailments of natural gas to our facilities in Chile during the period mid-May to August as a result of reduced supply from our suppliers in Argentina. We have not suffered any curtailments since early August. We continue to closely monitor this issue as there can be no assurance as to its ultimate outcome.

SUPPLY/DEMAND FUNDAMENTALS

Poor industry operating performance and strong demand for methanol was experienced throughout the fourth quarter of 2004 resulting in the continuation of very favourable methanol market conditions and low global inventories. The introduction of product from the 1.7 million tonne per year Atlas facility was primarily offset by the shutdowns of Lyondell's Channelview facility (750,000 tonnes) and Terra Industries' Beaumont plant (700,000 tonnes) during the second half of 2004. The 1.0 million tonne per year NPC facility in Iran also commenced operations during the third quarter of 2004 and a 1.0 million tonne facility in Saudi Arabia started up late in 2004.

Our 840,000 tonne per year Chile IV facility will be the next significant increment of industry supply. Additional capacity additions for 2005 are planned and we believe that the impact of this new supply will be largely offset by increased demand and further shutdowns of higher cost methanol production exposed to high North American natural gas prices or high energy prices. Production from our New Zealand facilities during 2004 totalled 1.1 million tonnes and as we are currently operating only one facility in New Zealand the production from this flexible asset will be lower in 2005.

The Methanex non-discounted reference prices for January 2005 are $316 per tonne ($0.95 per gallon) in the United States and $302 per tonne in Asia. In Europe, the January 2005 contract transaction price was held at EUR 230 (US$309 per tonne at the time of settlement compared with US$282 at October 2004). Currently, spot prices in the United States are approximately $299 per tonne ($0.90 per gallon) and spot prices in Europe (FOB Rotterdam) are approximately EUR 215 per tonne. Prices in Asia are currently between $280 and $295 per tonne.


METHANEX NON DISCOUNTED REGIONAL POSTED CONTRACT PRICES

                                           JAN      OCT
US$ per tonne                             2005     2004
-------------------------------------------------------

United States                             $316     $279
Europe(x)                                 $309     $282
Asia                                      $302     $272

(x) The European contract transaction price is Euros 230
    at October 2004 and January 2005 and is presented in
    the above table in United States dollars converted
    at the date of settlement.
-------------------------------------------------------

LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities before changes in non-cash working capital and the utilization of prepaid natural gas in the fourth quarter of 2004 were $104 million compared with $63 million for the same period in 2003. For the year ended December 31, 2004, cash flows from operating activities before changes in non-cash working capital and the utilization of prepaid natural gas were $375 million compared with $330 million for the same period in 2003. The improvement in cash flows from operating activities in 2004 compared with 2003 is primarily the result of higher levels of earnings.

During 2004 we have returned $119 million of cash to shareholders through share repurchases and quarterly dividend payments. On November 18, 2004, we announced an increase in our normal course issuer bid, raising the maximum allowable repurchase from 6.1 million common shares to 12.2 million common shares. The normal course issuer bid expires May 16, 2005. During the fourth quarter, we repurchased for cancellation 1.5 million shares at an average price of US$16.51 per share, or $25 million. To December 31, 2004, we have repurchased for cancellation 6.1 million shares under this bid at an average price of US$13.95 per share, totaling $86 million. During the fourth quarter of 2004, we paid a quarterly dividend of US$0.08 per share, or approximately $10 million.

On March 31, 2004, we repaid all of the limited recourse long-term debt related to the Titan methanol facility. The total payment, including transaction costs, was $183 million.

During the fourth quarter of 2004 we contributed $9 million to fund our portion of a debt reserve related to the limited recourse long-term debt of the Atlas joint venture and capital expenditures for this facility were $7 million.

We are currently expanding our operations in Chile with the construction of Chile IV, an 840,000 tonne per year methanol facility, which is expected to start up at the end of the first quarter of 2005. Capital expenditures for Chile IV during the fourth quarter were $15 million, including capitalized interest of $4 million. Total capital expenditures for Chile IV during 2004 were $80 million, including capitalized interest of $14 million.

We have excellent financial capacity and flexibility. Our cash balance at December 31, 2004 was $210 million and we have an undrawn $250 million credit facility. 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 2007. At December 31, 2004, our estimated remaining expenditures to complete the construction of Chile IV were $57 million, including capitalized interest of $6 million. We have $250 million of public bonds due August 2005 and are currently reviewing our refinancing options.

With $210 million cash on hand at the end of 2004 and a $250 million undrawn credit facility, we have the financial capacity to complete Chile IV and our capital maintenance spending program, pursue new opportunities to enhance our strategic position in the methanol industry and continue to deliver on our commitment to maintain a prudent balance sheet and return excess cash to shareholders.

The credit ratings for our unsecured notes at December 31, 2004 were as follows:


-------------------------------------------
Standard & Poor's             BBB-(stable)
Moody's Investor Service      Ba1 (stable)
Fitch                         BBB (stable)

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

SHORT-TERM OUTLOOK

Global economic growth and tight supply conditions resulted in a favourable pricing environment in 2004. As we enter 2005 the methanol market remains extremely tight and global inventory levels are low. We expect that the impact of planned new capacity additions during 2005 is likely to be largely offset by further shutdowns of higher cost global methanol production and increased demand. The methanol price will ultimately depend on industry operating rates, the rate of industry restructuring and the strength of global demand. We believe that our excellent financial position and financial flexibility, outstanding global supply network and low-cost position will ensure that Methanex continues to be the leader in the methanol industry.

January 26, 2005

ADDITIONAL INFORMATION

SUPPLEMENTAL NON-GAAP MEASURES

In addition to providing measures prepared in accordance with Canadian Generally Accepted Accounting Principles (GAAP), Methanex presents certain supplemental non-GAAP measures. These are EBITDA, income before unusual items (after-tax) and basic income 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. These measures are provided to assist readers in evaluating the operating performance and liquidity of the Company's ongoing business. These measures should be considered in addition to, and not as a substitute for, net income, cash flows from operating activities and other measures of financial performance and liquidity reported in accordance with GAAP.

EBITDA

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

                           THREE MONTHS ENDED           YEARS ENDED
                -----------------------------  --------------------
                   DEC 31    SEP 30    DEC 31     DEC 31     DEC 31
($ thousands)        2004      2004      2003       2004       2003
-------------------------------------------------------------------
-------------------------------------------------------------------
Cash flows from
 operating
 activities     $ 114,463 $  63,256 $  95,357  $ 335,619  $ 360,964
Add (deduct):
Changes in
 non-cash working
 capital and the
 utilization of
 prepaid natural
 gas              (10,928)   45,421   (32,093)    39,077    (30,554)
Other non-cash
 operating
 expenses          (4,638)   (4,493)   (7,418)   (12,895)   (18,279)
Asset
 restructuring
 charges - cash
 settlements            -         -     9,787          -      9,787
Interest expense    9,297     8,715    10,358     30,641     38,815
Interest and
 other income
 (expense)         (2,127)     (941)   (3,195)    (6,627)   (13,843)
Income taxes -
 current           14,702    13,944     8,783     48,572     39,586
-------------------------------------------------------------------
EBITDA          $ 120,769 $ 125,902 $  81,579  $ 434,387  $ 386,476
-------------------------------------------------------------------

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

Income before unusual items (after-tax) and basic income before unusual items (after-tax) per share 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.

The following table shows a reconciliation of net income (loss) to income before unusual items (after-tax) and the calculation of basic income before unusual items (after-tax) per share:

($ thousands,           THREE MONTHS ENDED           YEARS ENDED
 except number  -----------------------------  --------------------
 of shares and     DEC 31    SEP 30    DEC 31     DEC 31     DEC 31
 per share amounts   2004      2004      2003       2004       2003
-------------------------------------------------------------------
-------------------------------------------------------------------
Net income
 (loss)         $  66,061 $  71,178 $(111,696) $ 236,444  $   1,416
Add unusual
 items
 Asset
  restructuring
  charges
  (after-tax)           -         -   139,352          -    139,352
 Write-off of
  Australia
  project
  development
  costs                 -         -         -          -     39,833
-------------------------------------------------------------------
Income before
 unusual items
 (after-tax)    $  66,061 $  71,178 $  27,656  $ 236,444  $ 180,601
-------------------------------------------------------------------
Weighted average
 number of common
 shares
 outstanding
 (millions of
 shares)            120.4     121.6     119.7      121.5      123.0
Basic income
 before unusual
 items
 (after-tax) per
 share          $    0.55 $    0.59 $    0.23  $    1.95  $    1.47
-------------------------------------------------------------------


QUARTERLY FINANCIAL DATA (unaudited)

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

                                      THREE MONTHS ENDED
                      ----------------------------------------------
($ thousands, except     DEC 31       SEP 30      JUN 30      MAR 31
 per share amounts)        2004         2004        2004        2004
--------------------------------------------------------------------
--------------------------------------------------------------------
Revenue               $ 485,408    $ 428,840   $ 412,283   $ 392,953
Net income               66,061       71,178      52,375      46,830
Basic net income
 per common share          0.55         0.59        0.43        0.39
Diluted net income
 per common share          0.54         0.58        0.42        0.38
--------------------------------------------------------------------


                                      THREE MONTHS ENDED(1)
                      ----------------------------------------------
($ thousands, except     DEC 31       SEP 30      JUN 30      MAR 31
 per share amounts)        2003         2003        2003        2003
--------------------------------------------------------------------
--------------------------------------------------------------------
Revenue               $ 358,421    $ 340,180   $ 377,603   $ 343,342
Net income (loss)      (111,696)      (9,253)     48,415      73,950
Basic net income
 (loss) per common
 share                    (0.93)       (0.08)       0.38        0.59
Diluted net income
 (loss) per common
 share                    (0.93)       (0.08)       0.37        0.57
--------------------------------------------------------------------
(1) The 2003 financial results have been restated. Refer to note 1 of
    the attached consolidated financial statements.

FORWARD-LOOKING STATEMENTS

Information in this management's discussion and analysis may contain forward-looking statements. By their nature, such forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. They include world-wide economic conditions, actions of competitors, the availability and cost of gas feedstock, the ability to implement business strategies and pursue business opportunities, conditions in the methanol and other industries including the supply and demand for methanol and the risks attendant with producing and marketing methanol and carrying out major capital expenditure projects. Please also refer to page 43 of our 2003 Annual Report for more information on forward-looking statements.

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

                        THREE MONTHS ENDED               YEARS ENDED
                   ------------------------  -----------------------
                       DEC 31       DEC 31       DEC 31       DEC 31
                         2004         2003         2004         2003
--------------------------------------------------------------------

Revenue (note 1)   $  485,408   $  358,421   $1,719,484   $1,419,546
Cost of sales and
 operating expenses
 (note 1)             364,639      276,842    1,285,097    1,033,070
Depreciation and
 amortization          21,884       27,181       78,701       96,078
--------------------------------------------------------------------
Operating income
 before undernoted
 items                 98,885       54,398      355,686      290,398
Interest expense
 (note 8)              (9,297)     (10,358)     (30,641)     (38,815)
Interest and
 other income           2,127        3,195        6,627       13,843
Asset restructuring
 charges (note 10)          -     (139,352)           -     (139,352)
Write-off of Australia
 project development
 costs                      -            -            -      (39,833)
--------------------------------------------------------------------
Income (loss) before
 income taxes          91,715      (92,117)     331,672       86,241
Income taxes:
 Current              (14,702)      (8,783)     (48,572)     (39,586)
 Future               (10,952)     (10,796)     (46,656)     (45,239)
--------------------------------------------------------------------
                      (25,654)     (19,579)     (95,228)     (84,825)
--------------------------------------------------------------------
Net income
 (loss)            $   66,061   $ (111,696)  $  236,444   $    1,416
--------------------------------------------------------------------

Weighted average
 number of common
 shares
 outstanding(x)   120,378,149  119,677,786  121,515,689  122,961,809
Diluted weighted
 average number
 of common shares
 outstanding(x)   121,968,879  119,677,786  122,955,016  125,811,353

(x) number of common shares outstanding at December 31, 2004: 
120,022,417 (December 31, 2003: 120,007,767)

Basic net income
 (loss) per
 common share      $     0.55   $    (0.93)  $     1.95   $     0.01
Diluted net
 income (loss)
 per common
 share             $     0.54   $    (0.93)  $     1.92   $     0.01


METHANEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(thousands of U.S. dollars)
                                                DEC 31        DEC 31
                                                  2004          2003
--------------------------------------------------------------------
                                            (unaudited)
ASSETS

Current assets:
 Cash and cash equivalents                 $   210,049   $   287,863
 Receivables                                   293,207       220,871
 Inventories                                   142,164       126,729
 Prepaid expenses                               16,480        14,852
--------------------------------------------------------------------
                                               661,900       650,315
Property, plant and equipment (note 2)       1,366,787     1,320,227
Other assets                                    96,194       111,258
--------------------------------------------------------------------
                                           $ 2,124,881   $ 2,081,800
--------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 Accounts payable and accrued
  liabilities                              $   230,758   $   178,420
 Current maturities on long-term debt
  and other long-term liabilities
  (note 4)                                     268,303        33,026
--------------------------------------------------------------------
                                               499,061       211,446
Long-term debt (note 4)                        350,868       756,185
Other long-term liabilities                      60,170        67,420
Future income taxes (note 5)                    265,538       261,218
Shareholders' equity:
 Capital stock                                 523,255       499,258
 Contributed surplus (note 1)                    3,454         7,234
 Retained earnings (note 1)                    422,535       279,039
--------------------------------------------------------------------
                                               949,244       785,531
--------------------------------------------------------------------
                                           $ 2,124,881   $ 2,081,800
--------------------------------------------------------------------


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

                                                               TOTAL
                NUMBER OF               CONTRI-                SHARE-
                   COMMON    CAPITAL     BUTED   RETAINED    HOLDERS'
                   SHARES      STOCK   SURPLUS   EARNINGS     EQUITY
--------------------------------------------------------------------
--------------------------------------------------------------------
Balance,
 December
 31, 2002, as
 previously
 reported     125,651,639 $  517,210 $       - $  386,868 $  904,078
Adjustments for
 retroactive
 adoption of
 new accounting
 policies
 (note 1):
 Stock-based
  compensation          -          -     3,444     (3,444)         -
 Asset
  retirement
  obligations           -          -         -      4,259      4,259
--------------------------------------------------------------------
Balance,
 December
 31, 2002,
 as restated  125,651,639    517,210     3,444    387,683    908,337
Year ended
 December 31,
 2003
 Net income, as
  previously
  reported              -          -         -      7,508      7,508
 Adjustments for
  retroactive
  adoption of
  new accounting
  policies
  (note 1):
  Stock-based
   compensation
   expense              -          -     3,790     (3,790)         -
  Asset
   retirement
   obligations          -          -         -     (2,302)    (2,302)
 Proceeds on
  issue of
  shares on
  exercise of
  stock
  options       3,356,128     19,173         -          -     19,173
 Payment for
  shares
  repurchased  (9,000,000)   (37,125)        -    (51,523)   (88,648)
 Dividend
  payments              -          -         -    (58,537)   (58,537)
--------------------------------------------------------------------
Balance,
 December 31,
 2003, as
 restated     120,007,767    499,258     7,234    279,039    785,531
Nine month 
 period ended
 September 30,
 2004
 Net income             -          -         -    170,383    170,383
 Stock-based
  compensation
  expense               -          -     1,408          -      1,408
 Proceeds on
  issue of
  shares on
  exercise
  of stock
  options       4,544,600     33,600         -          -     33,600
 Reclassification
  of grant
  date fair
  value on
  exercise of
  options            -      3,489    (3,489)         -          -
 Payment for
  shares
  repurchased  (4,600,000)   (19,542)        -    (40,688)   (60,230)
 Dividend
  payments              -          -         -    (23,778)   (23,778)
--------------------------------------------------------------------
Balance,
 September
 30, 2004     119,952,367    516,805     5,153    384,956    906,914
Three month
 period ended
 December 31,
 2004
 Net income             -          -         -     66,061     66,061
 Stock-based
  compensation
  expense               -          -       330          -        330
 Proceeds on
  issue of
  shares on
  exercise of
  stock
  options       1,613,650     11,054         -          -     11,054
 Reclassification
  of grant
  date fair
  value on
  exercise of
  options             -      2,029    (2,029)         -          -
 Payment for
  shares
  repurchased  (1,543,600)    (6,633)             (18,857)   (25,490)
 Dividend
  payments              -          -         -     (9,625)    (9,625)
--------------------------------------------------------------------
Balance,
 December
 31, 2004     120,022,417 $  523,255 $   3,454 $  422,535 $  949,244
--------------------------------------------------------------------


METHANEX CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
(thousands of U.S. dollars)

                        THREE MONTHS ENDED               YEARS ENDED
                   ------------------------  -----------------------
                       DEC 31       DEC 31       DEC 31       DEC 31
                         2004         2003         2004         2003
--------------------------------------------------------------------
CASH FLOWS FROM
 OPERATING ACTIVITIES
Net income (loss)  $   66,061   $ (111,696)  $  236,444   $    1,416
Add:
 Depreciation and
  amortization         21,884       27,181       78,701       96,078
 Future income
  taxes                10,952       10,796       46,656       45,239
 Asset restructing
  charges (note 10)         -      129,565            -      129,565
 Write-off of
  Australia project
  development costs         -            -            -       39,833
 Other                  4,638        7,418       12,895       18,279
--------------------------------------------------------------------
Cash flows from
 operating
 activities before
 undernoted changes   103,535       63,264      374,696      330,410
Receivables           (37,641)       5,066     (72,336)       1,732
Inventories            (1,127)      (15,620)      (15,565)    28,894
Prepaid expenses       (1,259)      (10,913)      (1,628)     (2,773)
Accounts payable
 and accrued
 liabilities           50,955        53,560       50,452         552
Utilization of
 prepaid natural gas        -            -            -        2,149
--------------------------------------------------------------------
                      114,463       95,357      335,619      360,964
--------------------------------------------------------------------

CASH FLOWS FROM
 FINANCING ACTIVITIES
Repayment of
 limited recourse
 long-term debt             -      (11,731)    (182,758)     (40,731)
Release of
 restricted cash            -            -       14,258            -
Funding of debt
 service reserve
 account               (9,060)           -       (9,060)           -
Proceeds on issue of
 limited recourse
 long-term debt             -       17,434       14,887       46,547
Proceeds on issue of
 shares on exercise
 of stock options      11,054        3,118       44,654       19,173
Payment for shares
 repurchased          (25,490)           -      (85,720)     (88,648)
Dividend payments      (9,625)      (7,194)     (33,403)     (58,537)
Repayment of other
 long-term
 liabilities           (2,934)      (5,403)     (14,588)     (16,470)
--------------------------------------------------------------------
                      (36,055)      (3,776)    (251,730)    (138,666)
--------------------------------------------------------------------

CASH FLOWS FROM
 INVESTING ACTIVITIES
Plant and equipment
 under construction
 or development       (22,306)     (74,208)    (134,184)    (206,968)
Property, plant
 and equipment         (5,310)      (6,956)     (22,539)     (35,982)
Accounts payable
 related to capital
 expenditures            (108)      (6,930)       1,886        1,522
Acquisition of Titan
 Methanol Company,
 net of cash
 acquired                   -            -            -      (74,130)
Other assets           (2,334)     (24,204)      (6,866)     (40,264)
--------------------------------------------------------------------
                      (30,058)    (112,298)    (161,703)    (355,822)
--------------------------------------------------------------------
Increase (decrease)
 in cash and cash
 equivalents           48,350      (20,717)     (77,814)    (133,524)
Cash and cash
 equivalents,
 beginning of
 period               161,699      308,580      287,863      421,387
--------------------------------------------------------------------
Cash and cash
 equivalents,
 end of period     $  210,049   $  287,863   $  210,049   $  287,863
--------------------------------------------------------------------

SUPPLEMENTARY CASH
 FLOW INFORMATION
Interest paid, net
 of capitalized
 interest          $        -   $    1,389   $   31,277   $   34,278
Income taxes paid  $   14,432   $    5,500   $   49,628   $   33,716
--------------------------------------------------------------------


METHANEX CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Except where otherwise noted, tabular dollar amounts are stated in
thousands of United States dollars.

1. BASIS OF PRESENTATION:

These consolidated financial statements do not include all note disclosures required by Canadian generally accepted accounting principles for annual financial statements, and therefore should be read in conjunction with the annual consolidated financial statements included in the Methanex Corporation 2003 Annual Report. These interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles on a basis consistent with those followed in the most recent annual consolidated financial statements, except as described below:

(a) Shipping and handling costs:

Inland shipping and handling costs billed to customers were previously included in revenue in the 2003 annual consolidated financial statements. These costs have been reclassified from revenue to cost of sales and operating expenses with no impact on reported earnings. For the three month period and year ended December 31, 2004, $6 million (2003 - $7 million) and $22 million (2003 - $25 million) of these inland shipping and handling costs have been included in cost of sales and operating expenses, respectively.

(b) Stock-based compensation:

Effective January 1, 2004, the Company adopted the amended recommendations of the Canadian Institute of Chartered Accountants ("CICA") for accounting for stock-based compensation. The amended standard requires recognition of an estimate of the fair value of stock-based awards as a charge to earnings. Previously, the Company provided note disclosure of pro forma net income as if a fair value method had been used for stock based awards granted since January 1, 2002.

The amended recommendations have been applied retroactively, with restatement of prior periods. The restatement at December 31, 2003 resulted in an increase to contributed surplus and a decrease to retained earnings of $7 million (December 31, 2002 - $3 million). The adjustments represent the total compensation expense recorded for stock options granted on or after January 1, 2002. The restatement of the results for the three month period and year ended December 31, 2003 resulted in an increase to cost of sales and operating expenses of $1 million and $4 million, respectively. Compensation expense related to stock options was $0.3 million for the three month period ended December 31, 2004 and $2 million for the year ended December 31, 2004.

(c) Asset retirement obligations:

Effective January 1, 2004, the Company adopted the new CICA recommendations for accounting for asset retirement obligations, which include site restoration costs. The new standard requires that obligations associated with the retirement of tangible long-lived assets and associated retirement costs be recognized at fair value in the period in which the obligation is incurred with a corresponding increase in the carrying amount of the related long-lived asset. The asset retirement obligation liability is increased at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the initial fair value measurement.

This standard has been applied retroactively, with restatement of prior periods. This restatement resulted in a decrease to the accrual for site restoration and an increase to retained earnings of $2 million at December 31, 2003. The restatement of the results for the three month period and year ended December 31, 2003 resulted in a reduction to net income of $1 million and $2 million, respectively. The application of this standard results in charges to net income of $0.3 million for the three month period ended December 31, 2004 and $1 million for the year ended December 31, 2004.

2. PROPERTY, PLANT AND EQUIPMENT:

                                           ACCUMULATED           NET
                                    COST  DEPRECIATION    BOOK VALUE
--------------------------------------------------------------------
At December 31, 2004
Plant and equipment          $ 2,422,148   $ 1,302,701   $ 1,119,447
Plant and equipment
 under construction              222,443             -       222,443
Other                             53,976        29,079        24,897
--------------------------------------------------------------------
                             $ 2,698,567   $ 1,331,780   $ 1,366,787
--------------------------------------------------------------------

At December 31, 2003
Plant and equipment          $ 2,157,513   $ 1,237,872   $   919,641
Plant and equipment
 under construction              377,840             -       377,840
Other                             48,827        26,081        22,746
--------------------------------------------------------------------
                             $ 2,584,180   $ 1,263,953   $ 1,320,227
--------------------------------------------------------------------

3. INTEREST IN ATLAS JOINT VENTURE:

The Company has a 63.1% joint venture interest in Atlas Methanol Company ("Atlas"). The joint venture has constructed a 1.7 million tonne per year methanol plant in Trinidad which commenced operations on July 29, 2004.

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

                                    DEC 31, 2004        DEC 31, 2003
--------------------------------------------------------------------
Consolidated Balance Sheets:
Cash and cash equivalents              $  13,981           $  18,429
Other current assets                      21,677               2,443
Property, plant and equipment            284,336             235,718
Other assets                              14,930               5,996
Current liabilities                       30,112               4,486
Limited recourse long-term debt          159,012             144,125
--------------------------------------------------------------------


                           THREE MONTHS ENDED            YEARS ENDED
                          --------------------   -------------------
                            DEC 31     DEC 31      DEC 31     DEC 31
                              2004       2003        2004       2003
--------------------------------------------------------------------
Consolidated Statements
 of Income:
Revenue                   $ 51,632   $      -    $ 68,980   $      -
Expenses                    33,438          -      46,692          -
--------------------------------------------------------------------
Net income                $ 18,194   $      -    $ 22,288   $      -
--------------------------------------------------------------------
Consolidated Statements
 of Cash Flows:
Cash inflows from
 operating activities     $ 25,547   $      -    $ 32,865   $      -
Cash inflows (outflows)
 from financing
 activities                 (9,060)    17,434       5,827     46,547
Cash outflows from
 investing activities       (5,510)   (20,962)    (52,676)   (74,365)
--------------------------------------------------------------------


4. LONG-TERM DEBT:

                                        DEC 31, 2004    DEC 31, 2003
--------------------------------------------------------------------
Unsecured notes                            $ 449,920       $ 449,783
Atlas limited recourse facilities            159,012         144,125
Titan limited recourse facilities                  -         183,638
--------------------------------------------------------------------
                                             608,932         777,546
Less current portion                        (258,064)        (21,361)
--------------------------------------------------------------------
                                           $ 350,868       $ 756,185
--------------------------------------------------------------------

The limited recourse long-term debt of Atlas is described as limited recourse as it is secured only by the assets of the joint venture.

On March 31, 2004, the Company repaid all of the limited recourse long-term debt related to the Titan methanol facility. The total payment, including transaction costs, was $183 million. As a result of this repayment, the Company reclassified $14 million of restricted cash for a debt service reserve account from other assets to cash and cash equivalents.

5. FUTURE INCOME TAXES:

On acquisition of Titan Methanol Company in 2003, the Company recorded a future income tax liability based on uncertainty related to an interpretation of certain tax legislation. During 2004, the Company reviewed its accounting for the acquisition in light of recent events clarifying the tax legislation in effect at the date of acquisition. As a result, at March 31, 2004, the Company recorded a balance sheet adjustment to reduce the future income tax liability and property, plant and equipment by $42 million.

6. NET INCOME PER SHARE:

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

                        THREE MONTHS ENDED               YEARS ENDED
                  ------------------------  ------------------------
                       DEC 31       DEC 31       DEC 31       DEC 31
                         2004         2003         2004         2003
--------------------------------------------------------------------
Denominator for
 basic net
 income per
 common share     120,378,149  119,677,786  121,515,689  122,961,809
Effect of
 dilutive stock
 options            1,590,730            -    1,439,327    2,849,544
--------------------------------------------------------------------
Denominator for
 diluted net
 income per
 common share     121,968,879  119,677,786  122,955,016  125,811,353
--------------------------------------------------------------------


7. STOCK-BASED COMPENSATION:

(a) Stock options:

i) Incentive stock options:

Common shares reserved for incentive stock options at December 31,
2004 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, 2003      4,682,775   $ 11.27      3,105,550   $  7.51
  Granted                       -         -         93,300     11.56
  Exercised            (3,094,600)    10.82       (923,800)     7.32
  Cancelled              (200,000)    23.75        (67,400)     8.94
--------------------------------------------------------------------
Outstanding at
 September 30, 2004     1,388,175     10.50      2,207,650      7.72
  Granted                       -         -         10,000     13.39
  Exercised              (603,500)    10.08       (815,150)     6.68
  Cancelled                     -         -         (5,500)     7.97
--------------------------------------------------------------------
Outstanding at
 December 31, 2004        784,675   $ 10.82      1,397,000   $  8.36
--------------------------------------------------------------------

As at December 31, 2004, 784,675 incentive stock options denominated in CAD$ and 249,038 incentive stock options denominated in US$ had vested and were exercisable at average prices of CAD$10.82 and US$8.65, respectively.

ii) Performance stock options:

Common shares reserved for performance stock options at December 31, 2004 are as follows:

                                       NUMBER OF    AVERAGE EXERCISE
                                   STOCK OPTIONS         PRICE (CAD$)
--------------------------------------------------------------------
Outstanding at December 31, 2003         925,200              $ 4.47
Exercised                               (526,200)               4.47
--------------------------------------------------------------------
Outstanding at September 30, 2004        399,000                4.47
Exercised                               (195,000)               4.47
--------------------------------------------------------------------
Outstanding at December 31, 2004         204,000              $ 4.47
--------------------------------------------------------------------

As at December 31, 2004, all outstanding performance stock options have vested and are exercisable.

iii) Compensation expense related to stock options:

Compensation expense related to stock options included in cost of sales and operating expenses is $0.3 million for the three month period ended December 31, 2004 (2003 - $0.9 million) and $1.7 million for the year ended December 31, 2004 (2003 - $3.8 million). The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

  
                                            2004                2003
--------------------------------------------------------------------
Risk-free interest rate                       3%                  5%
Expected dividend yield                       2%                  2%
Expected life                            5 years             5 years
Expected volatility                          35%                 35%
--------------------------------------------------------------------

For the year ended December 31, 2004, the weighted average grant date fair value of stock options granted was US$3.36 per share (2003 - $2.59 per share).

(b) Deferred and restricted share units:

Deferred and restricted share units outstanding at December 31, 2004 are as follows:

                                       NUMBER OF           NUMBER OF
                                        DEFERRED          RESTRICTED
                                     SHARE UNITS         SHARE UNITS
--------------------------------------------------------------------
Outstanding at December 31, 2003         366,389             500,640
Granted                                  183,165             579,700
Dividend equivalents                       8,237              16,535
Redeemed                                       -             (77,833)
--------------------------------------------------------------------
Outstanding at September 30, 2004        557,791           1,019,042
Granted                                    4,608                   -
Dividend equivalents                       2,432               4,514
Cancelled                                      -              (9,243)
Redeemed                                (109,312)                  -
--------------------------------------------------------------------
Outstanding at December 31, 2004         455,519           1,014,313
--------------------------------------------------------------------

The fair value of deferred and restricted share units at December 31, 2004 was $26.9 million compared with an accrued value of $15.4 million. Compensation expense related to deferred and restricted share units included in cost of sales and operating expenses is $4.5 million for the three month period ended December 31, 2004 (2003 - $1.0 million) and $12.8 million for the year ended December 31, 2004 (2003 - $3.6 million). Included in compensation expense for the three month period and year ended December 31, 2004 is $3.4 million (2003 - $0.5 million) and $7.0 million (2003 - $1.3 million), respectively, related to the increase in our share price since the date of grant.

8. INTEREST EXPENSE:


                          THREE MONTHS ENDED             YEARS ENDED
                        ---------------------   --------------------
                          DEC 31      DEC 31      DEC 31      DEC 31
                            2004        2003        2004        2003
--------------------------------------------------------------------
Interest expense
 before capitalized
 interest               $ 13,364    $ 17,531    $ 54,503    $ 58,991
Less: capitalized
 interest                 (4,067)     (7,173)    (23,862)    (20,176)
--------------------------------------------------------------------
Interest expense        $  9,297    $ 10,358    $ 30,641    $ 38,815
--------------------------------------------------------------------

9. RETIREMENT PLANS:

Total net pension expense for the defined benefit and defined contribution pension plans charged to operations during the three month period and year ended December 31, 2004 was $1.3 million (2003 - $1.6 million) and $6.2 million (2003 - $6.4 million), respectively.

10. ASSET RESTRUCTURING CHARGES:

During the fourth quarter of 2003, the Company recorded a non-cash asset impairment charge totaling $129.6 million relating to the carrying value of property, plant and equipment and related assets in New Zealand and Medicine Hat, Alberta. The Company also incurred costs and made payments of $9.8 million primarily for employee termination benefits to reduce the workforce at the Company's New Zealand operations by approximately 82 employees and for costs to re-mothball the Medicine Hat facility.

METHANEX CORPORATION
QUARTERLY HISTORY (unaudited)

                                2004      Q4      Q3      Q2      Q1
--------------------------------------------------------------------

METHANOL SALES VOLUME
(thousands of tonnes)

 Company produced product      5,298   1,531   1,307   1,233   1,227
 Purchased product             1,960     402     423     600     535
 Commission sales(1)             169     128      41       -       -
--------------------------------------------------------------------

                               7,427   2,061   1,771   1,833   1,762
--------------------------------------------------------------------

METHANOL PRODUCTION
(thousands of tonnes)

 Chile                         2,692     690     640     666     696
 New Zealand                   1,088     266     304     229     289
 Canada                          486     122     121     121     122
 Titan, Trinidad                 740     154     176     220     190
 Atlas, Trinidad (63.1%)         421     264     157       -       -
--------------------------------------------------------------------

                               5,427   1,496   1,398   1,236   1,297
--------------------------------------------------------------------

METHANOL PRICE(2)
 ($/tonne)                       234     248     245     222     220
 ($/gallon)                     0.70    0.75    0.74    0.67    0.66

PER SHARE INFORMATION
 Net income (loss)            $ 1.95    0.55    0.59    0.43    0.39


                                2003      Q4      Q3      Q2      Q1
--------------------------------------------------------------------

METHANOL SALES VOLUME
(thousands of tonnes)

 Company produced product      4,933   1,328   1,200   1,211   1,194
 Purchased product             1,392     399     350     332     311
 Commission sales(1)             254       -       -      55     199
--------------------------------------------------------------------

                               6,579   1,727   1,550   1,598   1,704
--------------------------------------------------------------------

METHANOL PRODUCTION
(thousands of tonnes)

 Chile                         2,704     640     624     732     708
 New Zealand                     968     158     229     225     356
 Canada                          449     109      91     122     127
 Titan, Trinidad                 577     222     202     153       -
 Atlas, Trinidad (63.1%)           -       -       -       -       -
--------------------------------------------------------------------

                               4,698   1,129   1,146   1,232   1,191
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METHANOL PRICE(2)
 ($/tonne)                       220     204     216     240     223
 ($/gallon)                     0.66    0.61    0.65    0.72    0.67

PER SHARE INFORMATION
 Net income (loss)            $ 0.01   (0.93)  (0.08)   0.38    0.59


                                2002      Q4      Q3      Q2      Q1
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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
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                               7,220   1,821   1,814   1,801   1,783
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METHANOL PRODUCTION
(thousands of tonnes)

 Chile                         2,932     735     748     743     706
 New Zealand                   2,281     552     593     601     535
 Canada                          478     126     125     103     124
 Titan, Trinidad                   -       -       -       -       -
 Atlas, Trinidad (63.1%)           -       -       -       -       -
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                               5,691   1,413   1,466   1,446   1,365
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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)            $ 0.18   (0.25)   0.46    0.12   (0.14)

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



FOR FURTHER INFORMATION PLEASE CONTACT:

Methanex Corporation
Wendy Bach
Director, Investor Relations
(604) 661-2600
Website: www.methanex.com