TSX Commentary

Methanex Corp. (MX) – $23.55 CAD – Management Highlights Positive Growth Outlook and Potential Dividend Increase
Outperform, Above Average Risk
Methanex currently has sufficient gas to operate its Motunui facility in New Zealand until almost the end of 2010. One of Methanex’s priorities is to extend the life of the plant while maintaining a globally competitive cost structure. To help facilitate the development of additional gas supply, Methanex is investing $10 million with Kea Petroleum for the exploration of natural gas near its New Zealand facilities. RBC CM expects Methanex to generate significant free cash flow with the expected start-up of its Egyptian facility in Q2/10 and ongoing ramp-up of production in Chile. Management suggested Methanex could be in a strong position to return excess cash to shareholders. While not reflected in its current financial forecast, RBC CM would not be surprised to see either a dividend increase or share buybacks in late 2010. Methanex expects substantially higher sales of produced methanol in Q1/10 compared to Q4/09 following a quarter of inventory re-stocking. Generally consistent with RBC CM’s outlook, Methanex expects an average realized methanol price approximately $20/tonne higher in Q1/10 than its average realized methanol price of $282/tonne in Q4/09.