Market Overview

Methanex Reports Third Quarter Results

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VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 24, 2012) - Methanex Corporation (TSX:MX)(NASDAQ: MEOH) -

For the third quarter of 2012, Methanex reported Adjusted EBITDA(1) of $104 million and Adjusted net income(1) of $36 million ($0.38 per share on a diluted basis(1)). This compares with Adjusted EBITDA(1) of $113 million and Adjusted net income(1) of $44 million ($0.47 per share on a diluted basis(1)) for the second quarter of 2012.

Bruce Aitken, President and CEO of Methanex commented, "We reported a decline in EBITDA compared to last quarter as we realized a lower methanol price. Entering the fourth quarter, steady methanol demand and supply outages across the industry have resulted in upward pressure on spot methanol prices, and today, we announced an increase of $43 per tonne to our North-American non-discounted price. Longer term, the outlook for the industry and pricing environment looks very attractive, as demand growth is expected to significantly outpace new capacity additions over the next few years."

Mr. Aitken added, "We continue to make good progress on the initiatives to increase production in New Zealand and Medicine Hat, which could add up to one million tonnes of annual capacity by the end of 2013. The Louisiana project is also progressing well and is on track to add an additional one million tonnes of annual capacity by the end of 2014. In total, these projects have the potential to increase our operating capacity by approximately 2 million tonnes over the next couple of years and improve cash generation significantly."

Mr. Aitken concluded, "With over US$400 million of cash on hand, an undrawn credit facility, a robust balance sheet, and strong cash flow generation, we are well positioned to invest in the Louisiana project and other strategic growth opportunities and continue to deliver on our commitment to return excess cash to shareholders."

A conference call is scheduled for October 25, 2012 at 12:00 noon ET (9:00 am PT) to review these third quarter results. To access the call, dial the Conferencing operator ten minutes prior to the start of the call at (416) 340-8527, or toll free at (877) 240-9772. A playback version of the conference call will be available for three weeks at (905) 694-9451, or toll free at (800) 408-3053. The passcode for the playback version is 6328000. There will be a simultaneous audio-only webcast of the conference call, which can be accessed from our website at www.methanex.com. The webcast will be available on the website for three weeks following the call.

Methanex is a Vancouver-based, publicly traded company and is the world's largest supplier of methanol to major international markets. Methanex shares are listed for trading on the Toronto Stock Exchange in Canada under the trading symbol "MX", on the NASDAQ Global Market in the United States under the trading symbol "MEOH", and on the foreign securities market of the Santiago Stock Exchange in Chile under the trading symbol "Methanex". Methanex can be visited online at www.methanex.com.

FORWARD-LOOKING INFORMATION WARNING

This Third Quarter 2012 press release contains forward-looking statements with respect to us and the chemical industry. Refer to Forward-Looking Information Warning in the attached Third Quarter 2012 Management's Discussion and Analysis for more information.

(1) Adjusted EBITDA, Adjusted net income and Adjusted diluted net income per common share are non-GAAP measures which do not have any standardized meaning prescribed by GAAP. These measures represent the amounts that are attributable to Methanex Corporation shareholders and are calculated by excluding amounts associated with the 40% non-controlling interest in the methanol facility in Egypt, the mark-to-market impact of items which impact the comparability of our earnings from one period to another, which currently include only the mark-to-market impact of share-based compensation as a result of changes in our share price, and Louisiana project relocation expenses and charges. Refer to Additional Information - Supplemental Non-GAAP Measures on the attached Interim Report for the three months ended September 30, 2012 for reconciliations to the most comparable GAAP measures.

Interim Report for the Three Months Ended September 30, 2012

At October 24, 2012 the Company had 93,975,455 common shares issued and outstanding and stock options exercisable for 3,317,462 additional common shares.

Share Information

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

Investor Information

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

Transfer Agents & Registrars

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



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



THIRD QUARTER MANAGEMENT'S DISCUSSION AND ANALYSIS

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

FINANCIAL AND OPERATIONAL HIGHLIGHTS

A summary of net income (loss) attributable to Methanex shareholders, Adjusted net income(1) and Adjusted diluted net income per common share(1) is as follows:



Three Months Ended Nine Months Ended
-----------------------------------------------------
($ millions except
number of shares and Sep 30 Jun 30 Sep 30 Sep 30 Sep 30
per share amounts) 2012 2012 2011 2012 2011
----------------------------------------------------------------------------
Net income (loss) $ (3) $ 52 $ 62 $ 72 $ 137
attributable to
Methanex shareholders
Mark-to-market impact - (10) (22) 6 (20)
of share-based
compensation, net of
tax

Louisiana project
relocation expenses
and charges, net of
tax
Cash expense 21 2 - 23 -
Non-cash charge 18 - - 18 -
----------------------------------------------------------------------------
Adjusted net income(1) $ 36 $ 44 $ 40 $ 119 $ 117
----------------------------------------------------------------------------
Diluted weighted 93.9 95.1 94.4 94.9 94.4
average shares
outstanding (millions)
Adjusted diluted net $ 0.38 $ 0.47 $ 0.43 $ 1.26 $ 1.24
income per common
share(1)
----------------------------------------------------------------------------

-- We recorded Adjusted EBITDA(1) of $104 million for the third quarter of
2012 compared with $113 million for the second quarter of 2012. The
decrease in Adjusted EBITDA(1) was primarily due to a decrease in
average realized price from $384 per tonne for the second quarter of
2012 to $373 per tonne for the third quarter of 2012.
-- Production for the third quarter of 2012 was 1,025,000 tonnes compared
with 1,034,000 tonnes for the second quarter of 2012. During the third
quarter of 2012, we commenced production at the second Motunui facility
and we produced 346,000 tonnes in New Zealand compared with 210,000
tonnes in the second quarter of 2012. In Egypt, we produced 62,000
tonnes in the third quarter of 2012 compared with 164,000 tonnes in the
second quarter due to a planned maintenance shutdown and the impact of
natural gas curtailments.
-- During the third quarter of 2012, sales of Methanex-produced methanol
were 1,053,000 tonnes compared with 1,001,000 in the second quarter of
2012.
-- In July 2012, we reached a final investment decision to proceed with the
project to relocate an idle Chile facility to Geismar, Louisiana. The
project will add one million tonnes of annual production capacity and is
expected to be operational by the end of 2014. We have commenced
dismantling of the plant and expect to receive all key construction-
related permits by the end of 2012. During the third quarter of 2012,
we recorded a $35 million cash expense ($21 million after-tax) to
earnings related to Louisiana project relocation expenses that are not
eligible for capitalization. In addition, we recorded a $26 million non-
cash charge ($18 million after-tax) to earnings related to the Chile
facility that is being relocated to Louisiana.
-- During the third quarter of 2012, we paid a $0.185 per share dividend to
shareholders for a total of $17 million.

(1) These items are non-GAAP measures that do not have any standardized
meaning prescribed by GAAP and therefore are unlikely to be comparable
to similar measures presented by other companies. Refer to Additional
Information - Supplemental Non-GAAP Measures for a description of each
non-GAAP measure and reconciliations to the most comparable GAAP
measures.



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



FINANCIAL AND OPERATIONAL DATA

Nine Months
Three Months Ended Ended
----------------------------------------
($ millions, except per share Sep 30 Jun 30 Sep 30 Sep 30 Sep 30
amounts and where noted) 2012 2012 2011 2012 2011
----------------------------------------------------------------------------
Production (thousands of tonnes) 1,025 1,034 1,035 3,004 2,886
(attributable to Methanex
shareholders)
Sales volumes (thousands of tonnes):
Methanex-produced methanol 1,053 1,001 983 2,980 2,801
(attributable to Methanex
shareholders)
Purchased methanol 641 569 672 1,901 2,171
Commission sales(1) 205 276 235 679 638
----------------------------------------------------------------------------
Total sales volumes 1,899 1,846 1,890 5,560 5,610
Methanex average non-discounted 433 452 445 440 434
posted price ($ per tonne)(2)
Average realized price ($ per 373 384 377 380 369
tonne)(3)
Adjusted EBITDA (attributable to 104 113 111 310 294
Methanex shareholders)(4)
Cash flows from operating activities 131 135 119 360 321
Adjusted cash flows from operating 103 110 104 302 270
activities (attributable to
Methanex shareholders)(4)
Net income (loss) attributable to (3) 52 62 72 137
Methanex shareholders
Adjusted net income (attributable to 36 44 40 119 117
Methanex shareholders)(4)
Basic net income (loss) per common (0.03) 0.56 0.67 0.77 1.48
share (attributable to Methanex
shareholders)
Diluted net income (loss) per common (0.03) 0.50 0.59 0.76 1.38
share (attributable to Methanex
shareholders)
Adjusted diluted net income per 0.38 0.47 0.43 1.26 1.24
common share (attributable to
Methanex shareholders)(4,5)
Common share information (millions
of shares):
Weighted average number of common 94 94 93 94 93
shares
Diluted weighted average number of 94 95 94 95 94
common shares
Number of common shares 94 94 93 94 93
outstanding, end of period
----------------------------------------------------------------------------
(1) Commission sales represent volumes marketed on a commission basis
related to the 36.9% of the Atlas methanol facility and 40% of the Egypt
methanol facility that we do not own.
(2) Methanex average non-discounted posted price represents the average of
our non-discounted posted prices in North America, Europe and Asia
Pacific weighted by sales volume. Current and historical pricing
information is available at www.methanex.com.
(3) Average realized price is calculated as revenue, excluding commissions
earned and the Egypt non-controlling interest share of revenue, divided
by the total sales volumes of Methanex-produced (attributable to
Methanex shareholders) and purchased methanol.
(4) These items are non-GAAP measures that do not have any standardized
meaning prescribed by GAAP and therefore are unlikely to be comparable
to similar measures presented by other companies. Refer to Additional
Information - Supplemental Non-GAAP Measures for a description of each
non-GAAP measure and reconciliations to the most comparable GAAP
measures.
(5) For the three month period ended September 30, 2012, stock options and
tandem share appreciation rights have been excluded from the diluted net
income per common share (attributable to Methanex shareholders) as their
effect would be anti-dilutive. However, for the calculation of adjusted
diluted net income per common share (attributable to Methanex
shareholders) these items have been included in the denominator and the
diluted weighted average number of common shares is 95.0 million.


PRODUCTION SUMMARY
YTD Q3 YTD Q3
Q3 2012 Q2 2012 Q3 2011 2012 2011
Capacity Produc- Produc- Produc- Produc- Produc-
(thousands of tonnes) (1) tion tion tion tion tion
----------------------------------------------------------------------------
Chile I, III and IV(2) 700 59 82 116 254 441
New Zealand(3) 558 346 210 209 730 619
Atlas (Trinidad) 288 255 264 170 646 696
(63.1% interest)
Titan (Trinidad) 225 186 196 224 597 531
Egypt (60% interest) 190 62 164 191 428 400
Medicine Hat 118 117 118 125 349 199
----------------------------------------------------------------------------
2,079 1,025 1,034 1,035 3,004 2,886
----------------------------------------------------------------------------
(1) The production capacity of our facilities may be higher than original
nameplate capacity as, over time, these figures have been adjusted to
reflect ongoing operating efficiencies.
(2) In July 2012, we reached a final investment decision to proceed with the
project to relocate the Chile II facility to Geismar, Louisiana. The
Chile capacity in the above table excludes the 1.0 million tonnes of
annual production capacity which is being relocated to Louisiana.
(3) The production capacity of New Zealand represents the two 0.85 million
tonne facilities at Motunui and the 0.53 million tonne facility at
Waitara Valley. In July, we restarted the second Motunui facility, but
due to current distillation capacity constraints at the Motunui site,
the combined production capacity of both plants is approximately 1.5
million tonnes, compared with the combined nameplate capacity of
1.7 - 1.9 million tonnes, depending on natural gas composition (refer to
the New Zealand section for more information).



Chile

We continue to operate our Chile facilities significantly below site capacity. This is primarily due to curtailments of natural gas supply from Argentina - refer to the Management's Discussion and Analysis included in our 2011 Annual Report for more information.

During the third quarter of 2012, we produced 59,000 tonnes in Chile operating one plant at approximately 20% of capacity.

While investments have been made over the last few years for natural gas exploration and development in southern Chile, the timelines for significant increases in gas production are much longer than we had originally anticipated and existing gas fields are experiencing declines. As a result, the short-term outlook for gas supply in Chile continues to be challenging. In early October 2012, we completed a restructuring of our Chile operations which reduced the size of our workforce by 48 people and will result in a $5 million pre-tax charge in the fourth quarter of 2012.

We are continuing to pursue investment opportunities with Empresa Nacional del Petroleo (ENAP), GeoPark Chile Limited (GeoPark) and others to help accelerate natural gas exploration and development in southern Chile. We are working with ENAP to develop natural gas in the Dorado Riquelme block. Under the arrangement, we fund a 50% participation in the block and, as at September 30, 2012, we had contributed approximately $113 million and the carrying amount of our investment was $71 million. Over the past few years, we have also provided funding to support and accelerate GeoPark's natural gas exploration and development activities in southern Chile. GeoPark has agreed to supply us with all natural gas sourced from the Fell block under a ten-year exclusive supply arrangement that commenced in 2008. During the third quarter of 2012, approximately 90% of production at our Chilean facilities was produced with natural gas supplied from the Fell and Dorado Riquelme blocks. We are also participating in other exploration blocks with international oil and gas companies and as at September 30, 2012, we had contributed $15 million for our share of the exploration costs.

The future operating rate of our Chile site is primarily dependent on demand for natural gas for residential purposes, which is higher in the southern hemisphere winter, production rates from existing natural gas fields, and the level of natural gas deliveries from future exploration and development activities in southern Chile. We cannot provide assurance that we, ENAP, GeoPark or others will be successful in the exploration and development of natural gas or that we will obtain any additional natural gas from suppliers in Chile on commercially acceptable terms. As a result, we cannot provide assurance in the level of natural gas supply or that we will be able to source sufficient natural gas to operate any capacity in Chile or that we will have sufficient future cash flows from Chile to support the carrying value of our Chilean assets and that this will not have an adverse impact on our results of operations and financial condition.

New Zealand

Our New Zealand methanol facilities produced 346,000 tonnes of methanol in the third quarter of 2012 compared with 210,000 tonnes in the second quarter of 2012. We restarted a second Motunui facility in July 2012 which added 650,000 tonnes of annual production capacity to our New Zealand operations and brings the current site capacity to approximately 1.5 million tonnes. We are currently assessing the feasibility of debottlenecking the Motunui site and the potential to restart our nearby 530,000 tonne Waitara Valley plant which could add up to a further 900,000 tonnes of annual production capacity in New Zealand by the end of 2013.

Trinidad

In Trinidad, we own 100% of the Titan facility with an annual production capacity of 900,000 tonnes and have a 63.1% interest in the Atlas facility with an annual production capacity of 1,150,000 tonnes (63.1% interest). The Titan facility produced 186,000 tonnes in the third quarter of 2012 compared with 196,000 tonnes in the second quarter of 2012. Production in the third quarter of 2012 was impacted by unplanned maintenance outages and periodic natural gas curtailments.

The Atlas facility produced 255,000 tonnes in the third quarter of 2012 compared with 264,000 tonnes in the second quarter of 2012. The Atlas facility was shut down at the end of September 2012 for repairs and is expected to return to production at the beginning of November 2012.

We continue to experience some natural gas curtailments to our Trinidad facilities due to a mismatch between upstream commitments to supply the Natural Gas Company in Trinidad (NGC) and downstream demand from NGC's customers which becomes apparent when an upstream supply issue arises. We are engaged with key stakeholders to find a solution to this issue, but in the meantime we expect to continue to experience some gas curtailments to our Trinidad site.

Egypt

The Egypt methanol facility produced 62,000 tonnes (60% interest) in the third quarter of 2012 compared with 164,000 tonnes in the second quarter of 2012. We have a 60% equity interest in the facility and marketing rights for 100% of the production. Production from the Egypt facility in the third quarter of 2012 was lower than the second quarter of 2012 due to a planned maintenance outage which was completed in mid-July and natural gas supply restrictions.

During the third quarter of 2012, the Egypt facility experienced periodic natural gas supply constraints as a result of increased seasonal electricity demand and operating issues with the upstream gas infrastructure. This situation has continued into the fourth quarter of 2012 and may persist in the future.

Medicine Hat

Our 470,000 tonne per year facility in Medicine Hat, Alberta produced 117,000 tonnes in the third quarter of 2012 compared with 118,000 tonnes during the second quarter of 2012. We are currently assessing the feasibility of debottlenecking the Medicine Hat facility which could add a further 90,000 tonnes of annual production capacity to our Medicine Hat operations.

FINANCIAL RESULTS

For the third quarter of 2012 we recorded Adjusted EBITDA of $104 million and Adjusted net income of $36 million ($0.38 per share on a diluted basis). This compares with Adjusted EBITDA of $113 million and Adjusted net income of $44 million ($0.47 per share on a diluted basis) for the second quarter of 2012 and Adjusted EBITDA of $111 million and Adjusted net income of $40 million ($0.43 per share on a diluted basis) for the third quarter of 2011.

We calculate Adjusted EBITDA and Adjusted net income by excluding amounts associated with the 40% non-controlling interest in Egypt that we do not own, the mark-to-market impact of share-based compensation as a result of changes in our share price and items which are considered by management to be non-operational. Refer to Additional Information - Supplemental Non-GAAP Measures for a further discussion on how we calculate these measures.

A reconciliation from net income (loss) attributable to Methanex shareholders to Adjusted net income and the calculation of Adjusted diluted net income per common share is as follows:



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



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



Three Months Ended Nine Months Ended
-------------------------------------------------------
Sep 30 Jun 30 Sep 30 Sep 30 Sep 30
($ millions) 2012 2012 2011 2012 2011
----------------------------------------------------------------------------
Consolidated statements of income:
Revenue $ 655 $ 656 $ 670 $ 1,977 $ 1,912
Cost of sales and
operating (539) (517) (538) (1,606) (1,584)
expenses,
excluding
mark-to-market
impact of share-
based compensation
----------------------------------------------------------------------------
116 139 132 371 328
Comprised of:
Adjusted EBITDA 104 113 111 310 294
(attributable to
Methanex
shareholders)(1)
Attributable to 12 26 21 61 34
non-controlling
interests
----------------------------------------------------------------------------
116 139 132 371 328
Depreciation and (47) (44) (44) (130) (113)
amortization
Mark-to-market - 10 24 (8) 23
impact of share-
based compensation
Louisiana project (61) (4) - (65) -
relocation
expenses and
charges
----------------------------------------------------------------------------
Operating income(1) 8 101 112 168 238

Finance costs (18) (20) (17) (56) (44)
Finance income and (3) - (2) (2) 5
other expenses
Income tax recovery 15 (15) (19) (9) (44)
(expense)
----------------------------------------------------------------------------
Net income $ 2 $ 66 $ 74 $ 101 $ 155
----------------------------------------------------------------------------
Net income (loss) $ (3) $ 52 $ 62 $ 72 $ 137
attributable to
Methanex
shareholders
----------------------------------------------------------------------------
(1) These items are non-GAAP measures that do not have any standardized
meaning prescribed by GAAP and therefore are unlikely to be comparable
to similar measures presented by other companies. Refer to Additional
Information - Supplemental Non-GAAP Measures for a description of each
non-GAAP measure and reconciliations to the most comparable GAAP
measures.
(2) For the three month period ended September 30, 2012, stock options and
tandem share appreciation rights have been excluded from the diluted net
income per common share (attributable to Methanex shareholders) as their
effect would be anti-dilutive. However, for the calculation of adjusted
diluted net income per common share (attributable to Methanex
shareholders) these items have been included in the denominator and the
diluted weighted average number of common shares is 95.0 million.



ADJUSTED EBITDA (ATTRIBUTABLE TO METHANEX SHAREHOLDERS)

Our operations consist of a single operating segment - the production and sale of methanol. We review the results of operations by analyzing changes in the components of Adjusted EBITDA. For a discussion of the definitions used in our Adjusted EBITDA analysis, refer to How We Analyze Our Business.

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



Q3 2012 Q3 2012 YTD Q3 2012
compared with compared with compared with
($ millions) Q2 2012 Q3 2011 YTD Q3 2011
----------------------------------------------------------------------------
Average realized price $ (19) $ (6) $ 52
Sales volume 13 4 (8)
Total cash costs (3) (5) (28)
----------------------------------------------------------------------------
Increase (decrease) in $ (9) $ (7) $ 16
Adjusted EBITDA
----------------------------------------------------------------------------


Average realized price

Nine Months
Three Months Ended Ended
----------------------------------------
Sep 30 Jun 30 Sep 30 Sep 30 Sep 30
($ per tonne, except where noted) 2012 2012 2011 2012 2011
----------------------------------------------------------------------------
Methanex average non-discounted 433 452 445 440 434
posted price(1)
Methanex average realized price 373 384 377 380 369
Average discount 14% 15% 15% 14% 15%
----------------------------------------------------------------------------
(1) Methanex average non-discounted posted price represents the average of
our non-discounted posted prices in North America, Europe and Asia
Pacific weighted by sales volume. Current and historical pricing
information is available at www.methanex.com.



Overall methanol market conditions have remained balanced and pricing has been relatively stable during the periods presented (refer to Supply/Demand Fundamentals section for more information). Our average non-discounted posted price for the third quarter of 2012 was $433 per tonne compared with $452 per tonne for the second quarter of 2012 and $445 per tonne for the third quarter of 2011. Our average realized price for the third quarter of 2012 was $373 per tonne compared with $384 per tonne for the second quarter of 2012 and $377 per tonne for the third quarter of 2011. The change in average realized price for the third quarter of 2012 decreased Adjusted EBITDA by $19 million compared with the second quarter of 2012 and decreased Adjusted EBITDA by $6 million compared with the third quarter of 2011. Our average realized price for the nine months ended September 30, 2012 was $380 per tonne compared with $369 per tonne for the same period in 2011 and this increased Adjusted EBITDA by $52 million.

Sales volume

Methanol sales volumes excluding commission sales volumes were higher in the third quarter of 2012 compared with the second quarter of 2012 by 124,000 tonnes and third quarter of 2011 by 39,000 tonnes and this resulted in higher Adjusted EBITDA by $13 million and $4 million, respectively. Methanol sales volumes excluding commission sales volumes were lower for the nine month periods ended September 30, 2012 compared with the comparable period in 2011 by 91,000 tonnes and this resulted in lower Adjusted EBITDA by $8 million.

Total cash costs

The primary drivers of changes in our total cash costs are changes in the cost of methanol we produce at our facilities (Methanex-produced methanol) and changes in the cost of methanol we purchase from others (purchased methanol). All of our production facilities except Medicine Hat are underpinned by natural gas purchase agreements with pricing terms that include base and variable price components. We supplement our production with methanol produced by others through methanol offtake contracts and purchases on the spot market to meet customer needs and support our marketing efforts within the major global markets.

We have adopted the first-in, first-out method of accounting for inventories and it generally takes between 30 and 60 days to sell the methanol we produce or purchase. Accordingly, the changes in Adjusted EBITDA as a result of changes in Methanex-produced and purchased methanol costs primarily depend on changes in methanol pricing and the timing of inventory flows.

The impact on Adjusted EBITDA from changes in our cash costs are explained below:



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



Methanex-produced methanol costs

We purchase natural gas for the Chile, Trinidad, Egypt and New Zealand methanol facilities under natural gas purchase agreements where the terms include a base price and a variable price component linked to the price of methanol. Methanex-produced methanol costs were higher in the third quarter of 2012 compared the second quarter of 2012 and the third quarter of 2011 by $5 million and $9 million, respectively, primarily due to a change in the mix of production sold from inventory. For the nine month period ended September 30, 2012 compared with the same period in 2011, Methanex-produced methanol costs were higher by $31 million, primarily due to the impact of higher methanol pricing on natural gas costs and due to a change in the mix of production sold from inventory.

Proportion of Methanex-produced methanol sales

The cost of purchased methanol is directly linked to the selling price for methanol at the time of purchase and the cost of purchased methanol is generally higher than the cost of Methanex-produced methanol. Accordingly, an increase in the proportion of Methanex-produced methanol sales results in a decrease in our overall cost structure for a given period. For the third quarter of 2012 compared with the second quarter of 2012, a lower proportion of Methanex-produced methanol sales decreased Adjusted EBITDA by $5 million. For the third quarter of 2012 compared with the same period in 2011, Methanex-produced methanol sales were higher primarily due to the impact of higher sales of New Zealand production and this increased Adjusted EBITDA by $8 million.

For the nine month period ended September 30, 2012 compared with the same period in 2011, a higher proportion of Methanex-produced methanol sales increased Adjusted EBITDA by $39 million. The impact of higher sales volumes from the Egypt and Medicine Hat methanol facilities, which commenced operations in the first half of 2011, were partially offset by lower sales volumes from the Chile and Atlas methanol facilities in 2012.

Purchased methanol costs

Changes in purchased methanol costs for all periods presented are primarily as a result of changes in methanol pricing.

Logistics costs

For the nine month period ended September 30, 2012 compared with the same period in 2011, the logistics cost variance was impacted by a one-time $7 million charge in the first quarter of 2012 to terminate a time charter vessel lease contract.

Other, net

Other costs were higher for all periods presented due to a portion of fixed manufacturing costs being charged directly to earnings rather than to inventory due to lower production at our Chile and Egypt facilities.

Mark-to-Market Impact of Share-based Compensation

We grant share-based awards as an element of compensation. Share-based awards granted include stock options, share appreciation rights, tandem share appreciation rights, deferred share units, restricted share units and performance share units. For all the share-based awards, share-based compensation is recognized over the related vesting period for the proportion of the service that has been rendered at each reporting date. Share-based compensation includes an amount related to the grant-date value and a mark-to-market impact as a result of subsequent changes in the Company's share price. The grant-date value amount is included in Adjusted EBITDA and Adjusted net income. The mark-to-market impact of share-based compensation as a result of changes in our share price is excluded from Adjusted EBITDA and Adjusted net income and analyzed separately below.



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



Share appreciation rights (SARs) and tandem share appreciation rights (TSARs) are units that grant the holder the right to receive a cash payment upon exercise for the difference between the market price of the Company's common shares and the exercise price, which is determined at the date of grant. The fair value of SARs and TSARs are re-measured each quarter using the Black-Scholes option pricing model, which considers the market value of the Company's common shares on the last trading day of the quarter.

Deferred, restricted and performance share units are grants of notional common shares that are redeemable for cash upon vesting based on the market value of the Company's common shares and are non-dilutive to shareholders. For deferred, restricted and performance share units, the value is initially measured at the grant date and subsequently re-measured based on the market value of the Company's common shares on the last trading day of each quarter.

Louisiana Project Relocation Expenses and Charges

In July 2012, we reached a final investment decision to proceed with the project to relocate an idle Chile facility to Geismar, Louisiana with an estimated project cost of approximately $550 million. The project will add one million tonnes of annual production capacity and is expected to be operational by the end of 2014. We have commenced dismantling of the plant and expect to receive all key permits by the end of 2012. Under IFRS, certain costs associated with relocating an asset are not eligible for capitalization and are required to be charged directly to earnings. During the second and third quarters of 2012, we recorded cash expenses to earnings of $4 million ($2 million after tax) and $35 million ($21 million after-tax), respectively, of Louisiana project relocation expenses. In addition, in association with this decision, a non-cash $26 million ($18 million after-tax) charge was recorded to earnings in the third quarter of 2012 related to the carrying value of the Chile II facility that is being relocated to Louisiana.

Depreciation and Amortization

Depreciation and amortization was $47 million for the third quarter of 2012 compared with $44 million for the second quarter of 2012 and $44 million for the third quarter of 2011. Depreciation and amortization was higher in the third quarter of 2012 compared with the second quarter of 2012 and third quarter of 2011 primarily due to higher sales of Methanex-produced methanol and as a result of a higher proportion of depreciation being charged directly to earnings rather than to inventory due to lower production from our Egypt and Chile facilities. Depreciation and amortization was $130 million for the nine month period ended September 30, 2012 compared with $113 million for the same period in 2011. The increase in depreciation and amortization in 2012 compared with 2011 is primarily a result of depreciation associated with the Egypt (100% basis) and Medicine Hat methanol facilities which commenced operations in the first and second quarters of 2011, respectively.



Finance Costs

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



Finance costs before capitalized interest for the third quarter of 2012 were $19 million compared with $20 million for the second quarter of 2012 and $17 million for the third quarter of 2011. Finance costs before capitalized interest for the nine month period ended September 30, 2012 were $57 million compared with $51 million for the same period in 2011. The change in finance costs for all periods presented is primarily due to the impact of interest expense on the $250 million of unsecured notes issued by the Company in late February 2012. The unsecured notes bear an interest rate of 5.25% and mature in 2022. In August 2012, we repaid $200 million of unsecured notes bearing an interest rate of 8.75%.

Capitalized interest in 2011 relates to interest costs capitalized during the construction of the 1.26 million tonne per year methanol facility in Egypt (100% basis) which commenced operations in March 2011. Capitalized interest in the third quarter of 2012 relates to interest costs capitalized for the Louisiana Project.



Finance Income and
Other Expenses

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



The change in finance income and other expenses for all periods presented was primarily due to the impact of changes in foreign exchange rates.

Income Taxes

A summary of our income taxes for the third quarter of 2012 is as follows:



Three Months
Ended
Three Months Ended Sep 30 2012 Jun 30 2012
------------------------------------------------------------------
Amounts excluding
Louisiana Louisiana Project
Project Relocation Relocation
Expenses and Expenses and
($ millions) Charges Charges Total Total
----------------------------------------------------------------------------

Profit $ 47.5 $ (60.9) $ (13.4) $ 80.8
(loss)
before
income
tax
expense
Income tax (7.3) 22.1 14.8 (14.6)
recovery
(expense)
----------------------------------------------------------------------------
Net income $ 40.2 $ (38.8) $ 1.4 $ 66.2
(loss)
----------------------------------------------------------------------------
Effective 15% 36% 110% 18%
tax rate
----------------------------------------------------------------------------



Excluding income taxes related to Louisiana project relocation expenses and charges, the effective tax rate for the third quarter of 2012 was 15% compared with 18% for the second quarter of 2012.

We earn the majority of our pre-tax earnings in Trinidad, Egypt, Chile, Canada and New Zealand. In Trinidad and Chile, the statutory tax rate is 35% and in Egypt, the statutory tax rate is 25%. Our Atlas facility in Trinidad has partial relief from corporation income tax until 2014. We have significant loss carryforwards in Canada and New Zealand which have not been recognized for accounting purposes. During the third quarter of 2012, we earned a higher proportion of our consolidated income from methanol produced in jurisdictions with low effective tax rates and this contributed to a lower effective tax rate compared with the second quarter of 2012.

SUPPLY/DEMAND FUNDAMENTALS

We estimate that methanol demand, excluding methanol demand from integrated methanol to olefins facilities, is currently approximately 51 million tonnes on an annualized basis.

Traditional chemical derivatives consume about two-thirds of global methanol demand and growth is correlated to industrial production. Demand for methanol in traditional chemical derivatives has remained relatively stable.

Energy-related applications consume about one third of global methanol demand and over the last few years high oil prices have driven strong demand growth for methanol into energy applications such as gasoline blending and DME, primarily in China. Growth of methanol blending into gasoline in China has been particularly strong and we believe that future growth in this application is supported by regulatory changes in that country. Many provinces in China have implemented fuel blending standards, and China also has national standards in place for methanol fuel blending (M85 & M100, or 85% methanol and 100% methanol, respectively). Methanol demand into olefins ("MTO") is emerging as a significant methanol derivative. In China, there are three integrated and one merchant MTOplants in production and there is a second merchant plant expected to commence operation by the end of this year which could consume up to 1.8 million tonnes of methanol. We believe demand potential into energy-related applications and olefins production will continue to grow.





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



During the third quarter of 2012, market conditions and the pricing environment were relatively stable and our average non-discounted price was $433 per tonne. Entering the fourth quarter, as a result of steady demand and planned and unplanned industry outages, there has been upward pressure on spot pricing and we recently announced our North American non-discounted price for November at $482 per tonne, which is up $43 per tonne from October.

In Q3 2012, we restarted an idle plant in New Zealand that added 0.65 million tonnes of annual production capacity and production commenced at a 0.85 million tonne plant in Beaumont, Texas. We have secured an offtake for a substantial quantity of production from the Beaumont facility.

Over the next few years, there is a modest level of new capacity expected to come on-stream relative to demand growth expectations. There is a 0.8 million tonne plant expected to restart in Channelview, Texas in late 2013 and a 0.7 million tonne plant expected to start up in Azerbaijan in 2013. We are assessing the feasibility of initiatives which could increase annual production capacity by up to 900,000 tonnes in New Zealand and by up to 90,000 tonnes in Medicine Hat, Alberta by the end of 2013. We are also relocating an idle Chile facility to Geismar, Louisiana, which is on track to add one million tonnes of annual production capacity by the end of 2014. We expect that production from new capacity in China will be consumed in that country and that higher cost production capacity in China will need to operate in order to satisfy demand growth.

LIQUIDITY AND CAPITAL RESOURCES

Cash flows from operating activities

Cash flows from operating activities in the third quarter of 2012 were $131 million compared with $135 million for the second quarter of 2012 and $119 million for the third quarter of 2011. Cash flows from operating activities for the nine month period ended September 30, 2012 were $360 million compared with $321 million for the same period in 2011.

The changes in cash flows from operating activities resulted from changes in the following:



Q3 2012 Q3 2012 YTD Q3 2012
compared with compared with compared with
($ millions) Q2 2012 Q3 2011 YTD Q3 2011
----------------------------------------------------------------------------

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



Adjusted cash flows from operating activities

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

The changes in adjusted cash flows from operating activities resulted from changes in the following:



Q3 2012 Q3 2012 YTD Q3 2012
compared with compared with compared with
($ millions) Q2 2012 Q3 2011 YTD Q3 2011
----------------------------------------------------------------------------

Adjusted EBITDA $ (9) $ (7) $ 16
(attributable to
Methanex
shareholders)
Income taxes paid - 1 17
Other 2 5 (2)
----------------------------------------------------------------------------
Increase (decrease) in $ (7) $ (1) $ 31
adjusted cash flows
from operating
activities
----------------------------------------------------------------------------



Refer to the Additional Information - Supplemental Non-GAAP Measures section for a reconciliation of Adjusted cash flows from operating activities to the most comparable GAAP measure.

During the third quarter of 2012, we paid a quarterly dividend of $0.185 per share, or $17 million.

We operate in a highly competitive commodity industry and believe it is appropriate to maintain a conservative balance sheet and to maintain financial flexibility. During the third quarter of 2012, we repaid $200 million of unsecured notes and our cash balance at September 30, 2012 was $403 million, including $30 million related to the non-controlling interest in Egypt. We invest our cash only in highly rated instruments that have maturities of three months or less to ensure preservation of capital and appropriate liquidity. We have a strong balance sheet and an undrawn $200 million credit facility provided by highly rated financial institutions that expires in mid-2015.

Our planned capital maintenance expenditure program directed towards maintenance, turnarounds and catalyst changes for existing operations is currently estimated to total approximately $140 million to the end of 2013, including major refurbishments at some of our plants. In July 2012, we reached a final investment decision to proceed with the project to relocate an idle Chile facility to Geismar, Louisiana with estimated project costs of approximately $550 million. The plant is expected to be operational by the end of 2014. We are also considering other projects in New Zealand and Medicine Hat which, if approved, would result in an additional $160 million of capital expenditures by the end of 2013. We believe that we have the capacity to fund these growth initiatives with cash on hand, cash generated from operations, the undrawn bank facility and access to debt capital markets.

We believe we are well positioned to meet our financial commitments, invest to grow the Company and continue to deliver on our commitment to return excess cash to shareholders.

SHORT-TERM OUTLOOK

Entering the fourth quarter 2012, there is upward pressure on methanol prices as a result of steady demand and planned and unplanned industry outages. We recently announced our North American non-discounted price for November at $482 per tonne, which is up $43 per tonne from October.

The methanol price will ultimately depend on the strength of the global economy, industry operating rates, global energy prices, new supply additions and the strength of global demand. We believe that our financial position and financial flexibility, outstanding global supply network and competitive-cost position will provide a sound basis for Methanex to continue to be the leader in the methanol industry and to invest to grow the Company.

CONTROLS AND PROCEDURES

For the three months ended September 30, 2012, no changes were made in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ANTICIPATED CHANGES TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)

Consolidation and Joint Arrangement Accounting

In May 2011, the IASB issued new accounting standards related to consolidation and joint arrangement accounting. The IASB has revised the definition of "control," which is a criterion for consolidation accounting. In addition, changes to IFRS in the accounting for joint arrangements were issued which, under certain circumstances, removed the option for proportionate consolidation accounting so that the equity method of accounting for such interests would need to be applied. The impact of applying consolidation accounting or equity accounting does not result in any change to net earnings or shareholders' equity, but will result in a significant presentation impact. We currently account for our 63.1% interest in Atlas Methanol Company using proportionate consolidation accounting and upon adoption of these new standards effective January 1, 2013 we will account for this entity using equity accounting.

ADDITIONAL INFORMATION - SUPPLEMENTAL NON-GAAP MEASURES

In addition to providing measures prepared in accordance with International Financial Reporting Standards (IFRS), we present certain supplemental non-GAAP measures. These are Adjusted EBITDA, Adjusted net income, Adjusted diluted net income per common share, operating income and Adjusted cash flows from operating activities. These measures do not have any standardized meaning prescribed by generally accepted accounting principles (GAAP) and therefore are unlikely to be comparable to similar measures presented by other companies. These supplemental non-GAAP measures are provided to assist readers in determining our ability to generate cash from operations and improve the comparability of our results from one period to another. We believe these measures are useful in assessing operating performance and liquidity of the Company's ongoing business on an overall basis. We also believe Adjusted EBITDA is frequently used by securities analysts and investors when comparing our results with those of other companies.

Adjusted EBITDA (attributable to Methanex shareholders)

Adjusted EBITDA differs from the most comparable GAAP measure, net income attributable to Methanex shareholders, because it excludes finance costs, finance income and other expenses, income tax expense (recovery), depreciation and amortization, mark-to-market impact of share-based compensation and Louisiana project relocation expenses and charges.

Adjusted EBITDA and Adjusted net income exclude the mark-to-market impact of share-based compensation related to the impact of changes in our share price on share appreciation rights, tandem share appreciation rights, deferred share units, restricted share units and performance share units. The mark-to-market impact related to performance share units that is excluded from Adjusted EBITDA and Adjusted net income is calculated as the difference between the grant date value determined using a Methanex total shareholder return factor of 100% and the fair value recorded at each period end. As share-based awards will be settled in future periods, the ultimate value of the units is unknown at the date of grant and therefore the grant date value recognized in Adjusted EBITDA and Adjusted net income may differ from the total settlement cost.

The following table shows a reconciliation from net income (loss) attributable to Methanex shareholders to Adjusted EBITDA:



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



Adjusted Net Income and Adjusted Diluted Net Income per Common Share

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



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



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

Adjusted cash flows from operating activities differs from the most comparable GAAP measure, cash flows from operating activities, because it does not include cash flows associated with the 40% non-controlling interest in the methanol facility in Egypt, changes in non-cash working capital and the cash portion of Louisiana project relocation expenses and charges.

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



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



Operating Income

Operating income is reconciled directly to a GAAP measure in our consolidated statements of income.

QUARTERLY FINANCIAL DATA (UNAUDITED)

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




Three Months Ended
----------------------------------------------------
($ thousands, except per Sep 30 Jun 30 Mar 31 Dec 31
share amounts) 2012 2012 2012 2011
----------------------------------------------------------------------------
Revenue $ 655,330 $ 656,103 $ 665,867 $ 696,499
Net income (loss)(1) (2,571) 52,238 22,081 63,871
Adjusted net income(1,2) 36,140 44,353 38,780 64,987
Basic net income (loss) (0.03) 0.56 0.24 0.69
per common share(1)
Diluted net income (0.03) 0.50 0.23 0.68
(loss) per common
share(1)
Adjusted diluted net 0.38 0.47 0.41 0.69
income per share(1,2)
----------------------------------------------------------------------------

Three Months Ended
----------------------------------------------------
($ thousands, except per Sep 30 Jun 30 Mar 31 Dec 31
share amounts) 2011 2011 2011 2010
----------------------------------------------------------------------------
Revenue $ 669,702 $ 622,829 $ 619,007 $ 570,337
Net income(1) 62,316 40,529 34,610 25,508
Adjusted net income(1,2) 40,497 39,223 37,120 39,448
Basic net income per 0.67 0.44 0.37 0.28
common share(1)
Diluted net income per 0.59 0.43 0.37 0.27
common share(1)
Adjusted diluted net 0.43 0.41 0.39 0.42
income per share(1,2)
----------------------------------------------------------------------------
(1) Attributable to Methanex Corporation shareholders.
(2) These items are non-GAAP measures that do not have any standardized
meaning prescribed by GAAP and therefore are unlikely to be comparable
to similar measures presented by other companies. Refer to Additional
Information - Supplemental Non-GAAP Measures for a description of each
non-GAAP measure and reconciliations to the most comparable GAAP
measures.



FORWARD-LOOKING INFORMATION WARNING

This Third Quarter 2012 Management's Discussion and Analysis ("MD&A") as well as comments made during the Third Quarter 2012 investor conference call contain forward-looking statements with respect to us and our industry. These statements relate to future events or our future performance. All statements other than statements of historical fact are forward-looking statements. Statements that include the words "believes", "expects", "may", "will", "potential", "estimates", "target", "interest", "planning" or other comparable terminology and similar statements of a future or forward-looking nature identify forward-looking statements.

More particularly and without limitation, any statements regarding the following are forward-looking statements:



-- expected demand for methanol and its derivatives,
-- expected new methanol supply and timing for start-up of the same,
-- expected shutdowns (either temporary or permanent) or restarts of
existing methanol supply (including our own facilities), including,
without limitation, the timing and length of planned maintenance
outages,
-- expected methanol and energy prices,
-- expected levels of methanol purchases from traders or other third
parties,
-- expected levels, timing and availability of economically-priced natural
gas supply to each of our plants,
-- commitments, capital or otherwise of third parties to future natural gas
exploration and development in the vicinity of our plants,
-- expected capital expenditures, including, without limitation, those to
support natural gas exploration and development for our plants and the
restart of our idled methanol facilities,
-- anticipated production rates of our plants,
-- expected operating costs, including natural gas feedstock costs and
logistics costs,
-- expected tax rates or resolutions to tax disputes,
-- expected cash flows, earnings capability and share price,
-- ability to meet covenants or obtain waivers associated with our long-
term debt obligations, including, without limitation, the Egypt limited
recourse debt facilities that have conditions associated with
finalization of certain land title registration and related mortgages
that require action by Egyptian governmental entities,
-- availability of committed credit facilities and other financing,
-- shareholder distribution strategy and anticipated distributions to
shareholders,
-- commercial viability of, or ability to execute, future projects, plant
restarts, capacity expansions, plant relocations or other business
initiatives or opportunities, including the planned relocation of one of
our idle Chile methanol plants to Louisiana and certain initiatives in
New Zealand,
-- financial strength and ability to meet future financial commitments,
-- expected global or regional economic activity (including industrial
production levels),
-- expected outcomes of litigation or other disputes, claims and
assessments,
-- expected actions of governments, government agencies, gas suppliers,
courts, tribunals or other third parties, and
-- expected impact on our operations in Egypt or our financial condition as
a consequence of actions taken by the Government of Egypt and its
agencies.



We believe that we have a reasonable basis for making such forward-looking statements. The forward-looking statements in this document are based on our experience, our perception of trends, current conditions and expected future developments as well as other factors. Certain material factors or assumptions were applied in drawing the conclusions or making the forecasts or projections that are included in these forward-looking statements, including, without limitation, future expectations and assumptions concerning the following:



-- supply of, demand for, and price of, methanol, methanol derivatives,
natural gas, oil and oil derivatives,
-- success of natural gas exploration in Chile and New Zealand and our
ability to procure economically priced natural gas in Chile, New
Zealand, Canada and the United States,
-- production rates of our facilities,
-- receipt of permits in connection with the Louisiana relocation project,
-- receipt or issuance of third party consents or approvals, including,
without limitation, governmental registrations of land title and related
mortgages in Egypt,
-- governmental approvals related to natural gas exploration rights,
-- the establishment of new fuel standards,
-- operating costs including natural gas feedstock and logistics costs,
capital costs, tax rates, cash flows, foreign exchange rates and
interest rates,
-- availability of committed credit facilities and other financing,
-- timing of completion and cost of our Louisiana relocation project,
-- global and regional economic activity (including industrial production
levels),
-- absence of a material negative impact from major natural disasters,
-- absence of a material negative impact from changes in laws or
regulations,
-- absence of material negative impact from political instability in the
countries in which we operate, and
-- enforcement of contractual arrangements and ability to perform
contractual obligations by customers, gas and other suppliers and other
third parties.



However, forward-looking statements, by their nature, involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. The risks and uncertainties primarily include those attendant with producing and marketing methanol and successfully carrying out major capital expenditure projects in various jurisdictions, including, without limitation:



-- conditions in the methanol and other industries, including fluctuations
in supply, demand and price for methanol and its derivatives, including
demand for methanol for energy uses,
-- the price of natural gas, oil and oil derivatives,
-- the success of natural gas exploration and development activities in
southern Chile and New Zealand and our ability to obtain any additional
gas in Chile, New Zealand on commercially acceptable terms,
-- the ability to successfully carry out corporate initiatives and
strategies,
-- actions of competitors, suppliers and financial institutions,
-- conditions within the natural gas delivery systems that may prevent
delivery of our natural gas supply requirements,
-- competing demand for natural gas, especially with respect to residential
needs of citizens in Chile and Egypt,
-- actions of governments and governmental authorities, including without
limitation, the implementation of policies or other measures that could
impact the supply or demand for methanol or its derivatives,
-- changes in laws or regulations,
-- import or export restrictions, anti-dumping measures, increases in
duties, taxes and government royalties, and other actions by governments
that may adversely affect our operations or existing contractual
arrangements,
-- world-wide economic conditions, and
-- other risks described in our 2011 Management's Discussion and Analysis
and this Third Quarter 2012 Management's Discussion and Analysis.



Having in mind these and other factors, investors and other readers are cautioned not to place undue reliance on forward- looking statements. They are not a substitute for the exercise of one's own due diligence and judgment. The outcomes anticipated in forward-looking statements may not occur and we do not undertake to update forward-looking statements except as required by applicable securities laws.

HOW WE ANALYZE OUR BUSINESS

Our operations consist of a single operating segment - the production and sale of methanol. We review our results of operations by analyzing changes in the components of Adjusted EBITDA (refer to the Additional Information - Supplemental Non-GAAP Measures section for a description of each non-GAAP measure and reconciliations to the most comparable GAAP measures).

In addition to the methanol that we produce at our facilities ("Methanex-produced methanol"), we also purchase and re-sell methanol produced by others ("purchased methanol") and we sell methanol on a commission basis. We analyze the results of all methanol sales together, excluding commission sales volumes. The key drivers of change in Adjusted EBITDA are average realized price, cash costs and sales volume which are defined and calculated as follows:

PRICE

The change in Adjusted EBITDA as a result of changes in average realized price is calculated as the difference from period to period in the selling price of methanol multiplied by the current period total methanol sales volume excluding commission sales volume plus the difference from period to period in commission revenue.

CASH COST

The change in Adjusted EBITDA as a result of changes in cash costs is calculated as the difference from period to period in cash costs per tonne multiplied by the current period total methanol sales volume excluding commission sales volume in the current period. The cash costs per tonne is the weighted average of the cash cost per tonne of Methanex-produced methanol and the cash cost per tonne of purchased methanol. The cash cost per tonne of Methanex-produced methanol includes absorbed fixed cash costs per tonne and variable cash costs per tonne. The cash cost per tonne of purchased methanol consists principally of the cost of methanol itself. In addition, the change in Adjusted EBITDA as a result of changes in cash costs includes the changes from period to period in unabsorbed fixed production costs, consolidated selling, general and administrative expenses and fixed storage and handling costs.

VOLUME

The change in Adjusted EBITDA as a result of changes in sales volume is calculated as the difference from period to period in total methanol sales volume excluding commission sales volumes multiplied by the margin per tonne for the prior period. The margin per tonne for the prior period is the weighted average margin per tonne of Methanex-produced methanol and margin per tonne of purchased methanol. The margin per tonne for Methanex-produced methanol is calculated as the selling price per tonne of methanol less absorbed fixed cash costs per tonne and variable cash costs per tonne. The margin per tonne for purchased methanol is calculated as the selling price per tonne of methanol less the cost of purchased methanol per tonne.

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

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



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



Three Months Ended Nine Months Ended
-------------------------------- ------------------------------
Sep 30 Sep 30 Sep 30 Sep 30
2012 2011 2012 2011
----------------------------------------------------------------------------
Revenue $ 655,330 $ 669,702 $ 1,977,300 $ 1,911,538
Cost of (538,994) (513,600) (1,614,320) (1,560,447)
sales and
operating
expenses
Depreciation (47,689) (43,696) (130,092) (113,109)
and
amortization
Louisiana (60,857) - (64,543) -
project
relocation
expenses
and charges
(note 3)
----------------------------------------------------------------------------
Operating 7,790 112,406 168,345 237,982
income
Finance (17,764) (17,386) (56,434) (43,929)
costs (note 5)
Finance (3,398) (1,585) (2,012) 4,558
income and
other
expenses
----------------------------------------------------------------------------
Profit (13,372) 93,435 109,899 198,611
(loss)
before
income tax
expense
Income tax
recovery
(expense):
Current (6,844) (10,802) (22,001) (27,344)
Deferred 21,661 (8,036) 12,503 (16,387)
----------------------------------------------------------------------------
14,817 (18,838) (9,498) (43,731)
----------------------------------------------------------------------------
Net income $ 1,445 $ 74,597 $ 100,401 $ 154,880
(loss)
----------------------------------------------------------------------------
Attributable
to:
Methanex (2,571) 62,316 71,748 137,455
Corporation
shareholders
Non- 4,016 12,281 28,653 17,425
controlling
interests
----------------------------------------------------------------------------
$ 1,445 $ 74,597 $ 100,401 $ 154,880
----------------------------------------------------------------------------

Income
(loss) for
the period
attributable
to
Methanex
Corporation
shareholders
Basic net $ (0.03) $ 0.67 $ 0.77 $ 1.48
income
(loss)
per
common
share
(note 6)
Diluted $ (0.03) $ 0.59 $ 0.76 $ 1.38
net
income
(loss)
per
common
share
(note 6)

Weighted 93,880,221 93,202,401 93,691,597 92,954,844
average
number of
common
shares
outstanding
Diluted 93,880,221 94,441,681 94,887,279 94,404,262
weighted
average
number of
common
shares
outstanding




See accompanying notes to condensed consolidated interim financial statements.



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



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



See accompanying notes to condensed consolidated interim financial statements.



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

Sep 30 Dec 31
AS AT 2012 2011
----------------------------------------------------------------------------

ASSETS
Current assets:
Cash and cash equivalents $ 403,065 $ 350,711
Trade and other receivables 399,099 378,430
Inventories (note 2) 223,319 281,015
Prepaid expenses 28,571 24,465
----------------------------------------------------------------------------
1,054,054 1,034,621
Non-current assets:
Property, plant and equipment (note 3) 2,227,715 2,233,023
Other assets 127,763 125,931
----------------------------------------------------------------------------
2,355,478 2,358,954
----------------------------------------------------------------------------
$ 3,409,532 $ 3,393,575
----------------------------------------------------------------------------

LIABILITIES AND EQUITY
Current liabilities:
Trade, other payables and accrued liabilities $ 307,041 $ 327,130
Current maturities on long-term debt (note 4) 53,334 251,107
Current maturities on finance leases 7,198 6,713
Current maturities on other long-term 18,668 18,031
liabilities
----------------------------------------------------------------------------
386,241 602,981
Non-current liabilities:
Long-term debt (note 4) 855,518 652,148
Finance leases 50,508 55,979
Other long-term liabilities 197,771 178,172
Deferred income tax liabilities 292,266 302,332
----------------------------------------------------------------------------
1,396,063 1,188,631
Equity:
Capital stock 473,860 455,434
Contributed surplus 17,686 22,281
Retained earnings 964,077 942,978
Accumulated other comprehensive loss (14,321) (15,968)
----------------------------------------------------------------------------
Shareholders' equity 1,441,302 1,404,725
Non-controlling interests 185,926 197,238
----------------------------------------------------------------------------
Total equity 1,627,228 1,601,963
----------------------------------------------------------------------------
$ 3,409,532 $ 3,393,575
----------------------------------------------------------------------------



See accompanying notes to condensed consolidated interim financial statements.



Methanex Corporation
Consolidated Statements of Changes in Equity (unaudited)
(thousands of U.S. dollars, except number of common shares)



Accumulated
Number of Other
Common Capital Contributed Retained Comprehensive
Shares Stock Surplus Earnings Loss
----------------------------------------------------------------------------
Balance, December
31, 2010 92,632,022 $ 440,092 $ 25,393 $813,819 $ (26,093)
Net income - - - 137,455 -
Other
comprehensive
income - - - - 7,461
Compensation
expense
recorded for
stock options - - 657 - -
Issue of shares
on exercise of
stock options 585,798 11,023 - - -
Reclassification
of grant date
fair value on
exercise of
stock options - 3,819 (3,819) - -
Dividend
payments to
Methanex
Corporation
shareholders - - - (46,057) -
Distributions to
non-controlling
interests - - - - -
Equity
contributions
by non-
controlling
interests - - - - -
----------------------------------------------------------------------------
Balance, September
30, 2011 93,217,820 454,934 22,231 905,217 (18,632)
Net income 63,871 -
Other
comprehensive
income (loss) (10,258) 2,664
Compensation
expense
recorded for
stock options - - 180 - -
Issue of shares
on exercise of
stock options 29,935 370 - - -
Reclassification
of grant date
fair value on
exercise of
stock options - 130 (130) - -
Dividend
payments to
Methanex
Corporation
shareholders - - - (15,852) -
Distributions to
non-controlling
interests - - - - -
Equity
contributions
by non-
controlling
interests - - - - -
----------------------------------------------------------------------------
Balance, December
31, 2011 93,247,755 455,434 22,281 942,978 (15,968)
Net income - - - 71,748 -
Other
comprehensive
income - - - - 1,647
Compensation
expense
recorded for
stock options - - 564 - -
Issue of shares
on exercise of
stock options 720,455 13,267 - - -
Reclassification
of grant date
fair value on
exercise of
stock options - 5,159 (5,159) - -
Dividend
payments to
Methanex
Corporation
shareholders - - - (50,649) -
Distributions
to non-
controlling
interests - - - - -
Equity
contributions
by non-
controlling
interests - - - - -
----------------------------------------------------------------------------
Balance, September
30, 2012 93,968,210 $ 473,860 $ 17,686 $964,077 $ (14,321)
----------------------------------------------------------------------------




Non-
Shareholders' Controlling Total
Equity Interests Equity
--------------------------------------------------------------------------
Balance, December
31, 2010 $ 1,253,211 $ 156,412 $ 1,409,623
Net income 137,455 17,425 154,880
Other
comprehensive
income 7,461 4,997 12,458
Compensation
expense
recorded for
stock options 657 - 657
Issue of shares
on exercise of
stock options 11,023 - 11,023
Reclassification
of grant date
fair value on
exercise of
stock options - - -
Dividend
payments to
Methanex
Corporation
shareholders (46,057) - (46,057)
Distributions to
non-controlling
interests - (7,850) (7,850)
Equity
contributions
by non-
controlling
interests - 19,200 19,200
--------------------------------------------------------------------------
Balance, September
30, 2011 1,363,750 190,184 1,553,934
Net income 63,871 9,249 73,120
Other
comprehensive
income (loss) (7,594) 1,535 (6,059)
Compensation
expense
recorded for
stock options 180 - 180
Issue of shares
on exercise of
stock options 370 - 370
Reclassification
of grant date
fair value on
exercise of
stock options - - -
Dividend
payments to
Methanex
Corporation
shareholders (15,852) - (15,852)
Distributions to
non-controlling
interests - (3,730) (3,730)
Equity
contributions
by non-
controlling
interests - - -
--------------------------------------------------------------------------
Balance, December
31, 2011 1,404,725 197,238 1,601,963
Net income 71,748 28,653 100,401
Other
comprehensive
income 1,647 1,327 2,974
Compensation
expense
recorded for
stock options 564 - 564
Issue of shares
on exercise of
stock options 13,267 - 13,267
Reclassification
of grant date
fair value on
exercise of
stock options - - -
Dividend
payments to
Methanex
Corporation
shareholders (50,649) - (50,649)
Distributions
to non-
controlling
interests - (42,292) (42,292)
Equity
contributions
by non-
controlling
interests - 1,000 1,000
--------------------------------------------------------------------------
Balance, September
30, 2012 $ 1,441,302 $ 185,926 $ 1,627,228
--------------------------------------------------------------------------



See accompanying notes to condensed consolidated interim financial statements.



Methanex Corporation
Consolidated Statements of Cash Flows (unaudited)
(thousands of U.S. dollars)



Three Months Ended Nine Months Ended
--------------------------------------------------------
Sep 30 Sep 30 Sep 30 Sep 30
2012 2011 2012 2011
----------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,445 $ 74,597 $ 100,401 $ 154,880
Add (deduct) non-
cash items:
Depreciation and 47,689 43,696 130,092 113,109
amortization
Louisiana 25,688 - 25,688 -
project
relocation non-
cash charges
Income tax (14,817) 18,838 9,498 43,731
expense
(recovery)
Share based 3,340 (20,489) 24,880 (8,749)
compensation
expense
(recovery)
Finance costs 17,764 17,386 56,434 43,929
Other 6,613 (2,372) 10,459 (949)
Income taxes paid (4,239) (4,992) (15,337) (32,396)
Other cash (3,622) (1,823) (18,877) (8,819)
payments,
including share-
based
compensation
----------------------------------------------------------------------------
Cash flows from 79,861 124,841 323,238 304,736
operating
activities before
undernoted
Changes in non- 51,392 (5,722) 36,647 16,537
cash working
capital (note 8)
----------------------------------------------------------------------------
131,253 119,119 359,885 321,273
----------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Dividend payments (17,384) (15,847) (50,649) (46,057)
to Methanex
Corporation
shareholders
Interest paid, (31,520) (25,154) (58,543) (55,405)
including
interest rate
swap settlements
Net proceeds on - - 246,548 2,700
issue of long-
term debt
Repayment of long- (217,682) (16,677) (242,970) (41,517)
term debt and
limited recourse
debt
Change in project - (29,000) - (31,209)
finance reserve
accounts
Equity - - 1,000 19,200
contributions by
non-controlling
interests
Cash distributions (29,633) - (45,632) (1,250)
to non-
controlling
interests
Proceeds on issue 3,000 843 13,267 11,023
of shares on
exercise of stock
options
Repayment of (1,693) (1,545) (4,985) (4,390)
finance leases
and other long
term liabilities
----------------------------------------------------------------------------
(294,912) (87,380) (141,964) (146,905)
----------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Property, plant (19,879) (13,571) (111,469) (92,353)
and equipment
Louisiana project (24,281) - (38,604) -
expenditures
Oil and gas assets (5,719) (4,272) (17,674) (21,769)
GeoPark repayments - - 10,039 7,551
Changes in non- (6,606) 1,455 (7,859) (616)
cash working
capital related
to investing
activities (note 8)
----------------------------------------------------------------------------
(56,485) (16,388) (165,567) (107,187)
----------------------------------------------------------------------------
Increase (220,144) 15,351 52,354 67,181
(decrease) in
cash and cash
equivalents
Cash and cash 623,209 245,624 350,711 193,794
equivalents,
beginning of
period
----------------------------------------------------------------------------
Cash and cash $ 403,065 $ 260,975 $ 403,065 $ 260,975
equivalents, end
of period
----------------------------------------------------------------------------



See accompanying notes to condensed consolidated interim financial statements.

Methanex Corporation

Notes to Condensed Consolidated Interim Financial Statements (unaudited)

Except where otherwise noted, tabular dollar amounts are stated in thousands of U.S. dollars.

1. Basis of presentation:

Methanex Corporation (the Company) is an incorporated entity with corporate offices in Vancouver, Canada. The Company's operations consist of the production and sale of methanol, a commodity chemical. The Company is the world's largest supplier of methanol to major international markets in Asia Pacific, North America, Europe and Latin America.

These condensed consolidated interim financial statements are prepared in accordance with International Accounting Standards (IAS) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB) on a basis consistent with those followed in the most recent annual consolidated financial statements. These condensed consolidated interim financial statements include the Egypt methanol facility on a consolidated basis, with the other investors' 40% share presented as non-controlling interest, and the Company's proportionate share of the Atlas methanol facility.

These condensed consolidated interim financial statements do not include all of the information required for full annual financial statements and were approved and authorized for issue by the Audit, Finance & Risk Committee of the Board of Directors on October 24, 2012.

2. Inventories:

Inventories are valued at the lower of cost, determined on a first-in first-out basis, and estimated net realizable value. The amount of inventories included in cost of sales and operating expenses and depreciation and amortization for the three and nine month periods ended September 30, 2012 is $528 million (2011 - $516 million) and $1,543 million (2011 - $1,513 million), respectively.

3. Property, plant and equipment:



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



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

In addition, for the three month period ended September 30, 2012, the Company has charged to income $25.7 million (17.6 million after-tax) related to the carrying value of the Chile facility being relocated.

4. Long-term debt:



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



In February 2012, the Company issued $250 million of unsecured notes bearing an interest rate of 5.25% and due March 1, 2022 (effective yield 5.30%). During the three months ended September 30, 2012, the Company repaid $200 million of unsecured notes bearing an interest rate of 8.75%.

During the three and nine month periods ended September 30, 2012, the Company made repayments on its Egypt limited recourse debt facilities of $17.1 million and $33.6 million, respectively, and other limited recourse debt facilities of $0.6 million and $1.8 million, respectively. The Company also made repayments on its Atlas limited recourse debt facilities of $7.5 million during the nine month period ended September 30, 2012.

The Company has a $200 million unsecured revolving bank facility provided by highly rated financial institutions which expires mid-2015.

The Atlas and Egypt limited recourse debt facilities are described as limited recourse as they are secured only by the assets of the Atlas joint venture and the Egypt entity, respectively. Accordingly, the lenders to the limited recourse debt facilities have no recourse to the Company or its other subsidiaries. The Atlas and Egypt limited recourse debt facilities have customary covenants and default provisions that apply only to these entities, including restrictions on the incurrence of additional indebtedness, a requirement to fulfill certain conditions before the payment of cash or other distributions and a restriction on these distributions if there is a default subsisting. The Egypt limited recourse debt facilities also contain a covenant to complete by March 31, 2013 certain land title registrations and related mortgages that require action by Egyptian government entities. Management does not believe that the finalization of these items is material.

At September 30, 2012, management believes the Company was in compliance with all of the covenants and default provisions related to long-term debt obligations.

5. Finance costs:



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



Finance costs are primarily comprised of interest on borrowings and finance lease obligations, the effective portion of interest rate swaps designated as cash flow hedges, amortization of deferred financing fees, and accretion expense associated with site restoration costs. Interest during construction is capitalized until the plant is substantially completed and ready for productive use. The Company has interest rate swap contracts on its Egypt limited recourse debt facilities to swap the LIBOR-based interest payments for an average aggregated fixed rate of 4.8% plus a spread on approximately 75% of the Egypt limited recourse debt facilities for the period to March 31, 2015.

6. Net income per common share:

Diluted net income per common share is calculated by giving effect to the potential dilution that would occur if outstanding stock options and tandem share appreciation rights (TSARs) were exercised or converted to common shares. Outstanding TSARs may be settled in cash or common shares at the holder's option and for purposes of calculating diluted net income per common share, the more dilutive of cash-settled and equity-settled is used, regardless of how the plan is accounted for. Accordingly, TSARs that are accounted for using the cash-settled method will require an adjustment to the numerator and denominator if the equity-settled method is determined to have a dilutive effect on diluted net income per common share.

During the three month period ended September 30, 2012, the Company recorded a share-based compensation expense related to TSARs. However, for this period, the equity-settled method has been determined to be the more dilutive for purposes of calculating diluted net income per common share.

A reconciliation of the net income used for the purpose of calculating diluted net income per common share is as follows:



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



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



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



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



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



7. Share-based compensation:

a) Stock options, share appreciation rights (SARs) and tandem share appreciation rights (TSARs):

(i) Outstanding units:

Information regarding units outstanding and exercisable at September 30, 2012 is as follows:



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



(ii) Compensation expense related to stock options:

For the three and nine month periods ended September 30, 2012, compensation expense related to stock options included in cost of sales and operating expenses was $0.2 million (2011 - $0.2 million) and $0.6 million (2011 - $0.7 million), respectively. The fair value of each stock option grant was estimated on the date of grant using the Black-Scholes option pricing model.

(iii) Compensation expense related to SARs and TSARs:

Compensation expense for SARs and TSARs is measured based on their fair value and is recognized over the vesting period. Changes in fair value each period are recognized in net income for the proportion of the service that has been rendered at each reporting date. The fair value at September 30, 2012 was $15.1 million compared with the recorded liability of $12.0 million. The difference between the fair value and the recorded liability of $3.1 million will be recognized over the weighted average remaining vesting period of approximately 1.8 years. The weighted average fair value of the vested SARs and TSARs was estimated at September 30, 2012 using the Black-Scholes option pricing model.

For the three and nine month periods ended September 30, 2012, compensation expense related to SARs and TSARs included an expense in cost of sales and operating expenses of $0.1 million (2011 - recovery of $8.4 million) and $7.2 million (2011 - recovery of $4.5 million), respectively. This included a recovery of $1.1 million (2011 - recovery of $10.0 million) and an expense of $0.3 million (2011 - recovery of $10.4 million), respectively, related to the effect of the change in the Company's share price for the three and nine month periods ended September 30, 2012.

b) Deferred, restricted and performance share units:

Deferred, restricted and performance share units outstanding at September 30, 2012 are as follows:



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



Compensation expense for deferred, restricted and performance share units is measured at fair value based on the market value of the Company's common shares and is recognized over the vesting period. Changes in fair value are recognized in earnings for the proportion of the service that has been rendered at each reporting date. The fair value of deferred, restricted and performance share units at September 30, 2012 was $46.3 million compared with the recorded liability of $40.6 million. The difference between the fair value and the recorded liability of $5.7 million will be recognized over the weighted average remaining vesting period of approximately 1.7 years.

For the three and nine month periods ended September 30, 2012, compensation expense related to deferred, restricted and performance share units included in cost of sales and operating expenses was an expense of $3.1 million (2011 - recovery of $12.2 million) and $17.1 million (2011 - recovery of $4.8 million), respectively. This included an expense of $1.1 million (2011 - recovery of $13.8 million) and $7.3 million (2011 - recovery of $12.1 million), respectively, related to the effect of the change in the Company's share price for the three and nine month periods ended September 30, 2012.

8. Changes in non-cash working capital:

Changes in non-cash working capital for the three and nine month periods ended September 30, 2012 were as follows:



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

These changes relate to the
following activities:
Operating $ 51,392 $ (5,722) $ 36,647 $ 16,537
Investing (6,606) 1,455 (7,859) (616)
----------------------------------------------------------------------------
Changes in non-cash working $ 44,786 $ (4,267) $ 28,788 $ 15,921
capital
----------------------------------------------------------------------------



9. Financial instruments:

The Egypt limited recourse debt facilities bear interest at LIBOR plus a spread. The Company has interest rate swap contracts to swap the LIBOR-based interest payments for an average aggregated fixed rate of 4.8% plus a spread on approximately 75% of the Egypt limited recourse debt facilities for the period to March 31, 2015. The Company has designated these interest rate swaps as cash flow hedges. These interest rate swaps had an outstanding notional amount of $329 million as at September 30, 2012. The notional amount decreases over the expected repayment period. At September 30, 2012, these interest rate swap contracts had a negative fair value of $31.8 million (2011 - $41.5 million) recorded in other long-term liabilities. The fair value of these interest rate swap contracts will fluctuate until maturity.

The Company also designates as cash flow hedges forward exchange contracts to sell euro at a fixed USD exchange rate. At September 30, 2012, the Company had outstanding forward exchange contracts designated as cash flow hedges to sell a notional amount of 28.4 million euro in exchange for US dollars and these euro contracts had a negative fair value of $0.5 million (2011 - positive fair value of $0.4 million) recorded in trade, other payables and accrued liabilities. Changes in fair value of derivative financial instruments designated as cash flow hedges have been recorded in other comprehensive income.

10. Contingent liability:

The Board of Inland Revenue of Trinidad and Tobago issued an assessment in 2011 against the Company's 63.1% owned joint venture, Atlas Methanol Company Unlimited ("Atlas"), in respect of the 2005 financial year. All subsequent tax years remain open to assessment. The assessment relates to the pricing arrangements of certain long-term fixed price sales contracts that extend to 2014 and 2019 related to methanol produced by Atlas. The impact of the amount in dispute for the 2005 financial year is nominal as Atlas was not subject to corporation income tax in that year. Atlas has partial relief from corporation income tax until 2014.

The Company has lodged an objection to the assessment. Based on the merits of the case and legal interpretation, management believes its position should be sustained.



Methanex Corporation
Quarterly History (unaudited)

YTD Q3 Q2 Q1
2012 2012 2012 2012 2011 Q4 Q3 Q2 Q1
----------------------------------------------------------------------------
METHANOL SALES
VOLUMES
(thousands of tonnes)

Methanex-produced 2,980 1,053 1,001 926 3,853 1,052 983 970 848
Purchased methanol 1,901 641 569 691 2,815 644 672 664 835
Commission sales (1) 679 205 276 198 846 208 235 231 172
----------------------------------------------------------------------------

5,560 1,899 1,846 1,815 7,514 1,904 1,890 1,865 1,855
----------------------------------------------------------------------------

METHANOL PRODUCTION
(thousands of tonnes)

Chile 254 59 82 113 554 113 116 142 183
New Zealand 730 346 210 174 830 211 209 207 203
Atlas, Trinidad
(63.1%) 646 255 264 127 891 195 170 263 263
Titan, Trinidad 597 186 196 215 711 180 224 186 121
Egypt (60%) 428 62 164 202 532 132 191 178 31
Medicine Hat 349 117 118 114 329 130 125 74 -
----------------------------------------------------------------------------

3,004 1,025 1,034 945 3,847 961 1,035 1,050 801
----------------------------------------------------------------------------

AVERAGE REALIZED
METHANOL PRICE (2)
($/tonne) 380 373 384 382 374 388 377 363 367
($/gallon) 1.14 1.12 1.15 1.15 1.12 1.17 1.13 1.09 1.10

PER SHARE
INFORMATION(3)($ per
share)
Basic net income
(loss) 0.77 (0.03) 0.56 0.24 2.16 0.69 0.67 0.44 0.37
Diluted net income
(loss) 0.76 (0.03) 0.50 0.23 2.06 0.68 0.59 0.43 0.37
Adjusted diluted net
income(4) 1.26 0.38 0.47 0.41 1.92 0.69 0.43 0.41 0.39

2010 Q4 Q3 Q2 Q1
---------------------------------------------------


METHANOL SALES
VOLUMES
(thousands of tonnes)

Methanex-produced 3,540 831 885 900 924
Purchased methanol 2,880 806 792 678 604
Commission sales (1) 509 151 101 107 150
---------------------------------------------------

6,929 1,788 1,778 1,685 1,678
---------------------------------------------------

METHANOL PRODUCTION
(thousands of tonnes)

Chile 935 208 194 229 304
New Zealand 830 206 200 216 208
Atlas, Trinidad
(63.1%) 884 266 284 96 238
Titan, Trinidad 891 233 217 224 217
Egypt (60%) - - - - -
Medicine Hat - - - - -
---------------------------------------------------

3,540 913 895 765 967
---------------------------------------------------

AVERAGE REALIZED
METHANOL PRICE (2)
($/tonne) 306 348 286 284 305
($/gallon) 0.92 1.05 0.86 0.85 0.92

PER SHARE
INFORMATION(3)($ per
share)
Basic net income
(loss) 1.04 0.28 0.31 0.16 0.29
Diluted net income
(loss) 1.03 0.27 0.31 0.15 0.29
Adjusted diluted net
income(4) 0.93 0.42 0.13 0.09 0.29

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

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

(3) Per share information calculated using net income (loss) attributable to
Methanex shareholders.

(4) This item is a non-GAAP measure that does not have any standardized
meaning prescribed by GAAP and therefore is unlikely to be comparable to
similar measures presented by other companies. Refer to Additional
Information - Supplemental Non-GAAP Measures for a description of the
non-GAAP measure and reconciliation to the most comparable GAAP measure.















Attachment Available: http://cnrp.marketwire.com/cnrp_files/20121025-mxfinal.pdf


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

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