Methanex Corp – ‘424B1’ on 6/14/02

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Prospectus   —   Rule 424(b)(1)
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Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       Final Prospectus                                     104    500K 

Document Table of Contents

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[LOGO]                                              Filed pursuant to General   
                                                    Instruction II.K of Form F-9
                                          File no. 333-89526

$200,000,000

METHANEX CORPORATION
8.75% Senior Notes due 2012 
----------------------

Methanex Corporation will pay interest on the Notes on February 15 and
August 15 of each year. The first such payment will be made on February 15,     
2003. The Notes will be issued only in denominations of $1,000 and integral     
multiples of $1,000.                                                            

 See "Risk Factors" beginning on page 8 to read about factors you should
consider before buying the Notes.                                               
----------------------

    METHANEX CORPORATION IS PERMITTED TO PREPARE THIS PROSPECTUS IN ACCORDANCE
WITH CANADIAN DISCLOSURE REQUIREMENTS, WHICH ARE DIFFERENT FROM THOSE OF THE    
UNITED STATES. METHANEX CORPORATION PREPARES ITS FINANCIAL STATEMENTS IN        
ACCORDANCE WITH CANADIAN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES, AND THEY ARE 
SUBJECT TO CANADIAN AUDITING AND AUDITOR INDEPENDENCE STANDARDS. AS A RESULT,   
THEY MAY NOT BE COMPARABLE TO FINANCIAL STATEMENTS OF UNITED STATES COMPANIES.  

 OWNING THE NOTES MAY SUBJECT YOU TO TAX CONSEQUENCES BOTH IN THE UNITED
STATES AND CANADA. THIS PROSPECTUS MAY NOT DESCRIBE THESE TAX CONSEQUENCES      
FULLY. YOU SHOULD READ THE TAX DISCUSSION UNDER "TAX CONSIDERATIONS".           

   YOUR ABILITY TO ENFORCE CIVIL LIABILITIES UNDER THE UNITED STATES FEDERAL
SECURITIES LAWS MAY BE AFFECTED ADVERSELY BECAUSE WE ARE INCORPORATED IN CANADA,
A MAJORITY OF OUR OFFICERS AND DIRECTORS AND SOME OF THE EXPERTS NAMED IN THIS  
PROSPECTUS ARE CANADIAN RESIDENTS, AND SUBSTANTIALLY ALL OF OUR ASSETS AND THE  
ASSETS OF THOSE OFFICERS, DIRECTORS AND EXPERTS ARE LOCATED OUTSIDE OF THE      
UNITED STATES.                                                                  

 NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.                                                                        

   THERE IS NO MARKET THROUGH WHICH THE NOTES MAY BE SOLD AND PURCHASERS MAY
NOT BE ABLE TO RESELL NOTES PURCHASED UNDER THIS PROSPECTUS.                    

   FOR THE TWELVE MONTHS ENDED MARCH 31, 2002, THE DOLLAR AMOUNT OF EARNINGS
COVERAGE DEFICIENCY, BASED ON EARNINGS BEFORE INTEREST ON LONG TERM DEBT AND    
INCOME TAXES, WAS APPROXIMATELY $21.6 MILLION. SEE "PRO FORMA INTEREST          
COVERAGE".                                                                      
----------------------

                                                                [Download Table]

                                                             Per Note     Total    
                                                             --------     -----    
                                                                                   
Initial public offering price...............................   100%    $200,000,000
Underwriting commission.....................................   1.5%    $  3,000,000
Proceeds, before expenses, to Methanex......................  98.5%    $197,000,000

    The initial public offering price set forth above does not include accrued
interest, if any. Interest on the Notes will accrue from June 19, 2002 and must 
be paid by the purchasers if the Notes are delivered after June 19, 2002.       
----------------------

   AFFILIATES OF TWO OF THE UNDERWRITERS ARE LENDERS TO US UNDER A REVOLVING
CREDIT FACILITY. CONSEQUENTLY, WE MAY BE CONSIDERED TO BE A CONNECTED ISSUER OF 
SUCH UNDERWRITERS UNDER APPLICABLE CANADIAN SECURITIES LEGISLATION. SEE "USE OF 
PROCEEDS" AND "UNDERWRITING".                                                   

The underwriters expect to deliver the Notes in book-entry form only  
through the facilities of The Depository Trust Company against payment in New   
York, New York on June 19, 2002.                                                

GOLDMAN, SACHS & CO.                                                            
Sole Book-Running Manager                                                 
CIBC WORLD MARKETS      
                                       RBC CAPITAL MARKETS
----------------------
Prospectus dated June 13, 2002. 

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SUMMARY 

    The following section summarizes more detailed information presented later
in this prospectus. You should read the entire prospectus, including, in        
particular, the "Risk Factors" beginning on page 8 and our consolidated         
financial statements and the related notes included elsewhere in this           
prospectus. In this prospectus, except where otherwise indicated, all amounts   
are expressed in United States dollars, references to "$" are to United States  
dollars and references to "Cdn$" are to Canadian dollars. In this prospectus,   
except where otherwise indicated or the context otherwise requires, references  
to "we", "us", "our" and similar terms, as well as references to "Methanex" and 
the "Company", refer to Methanex Corporation and its subsidiaries.              

THE COMPANY 

We are the world's largest producer and marketer of methanol, a liquid
commodity chemical produced primarily from natural gas. Our average sales       
represented approximately 25% of world methanol demand between 1997 and 2001. We
believe that our low cost natural gas supply contracts and extensive            
distribution network provide us with competitive advantages in our industry. We 
have methanol production facilities located in Chile, New Zealand and North     
America. In a joint venture with BP, we are currently building the world's      
largest methanol plant in Trinidad which we expect will commence commercial     
operation by late 2003.                                                         

   For the year ended December 31, 2001, our average realized methanol price
was $172 per tonne and we generated $71 million of net income and $238 million  
of EBITDA on revenues of $1.15 billion. For the three months ended March 31,    
2002, our average realized methanol price was $111 per tonne and we incurred a  
net loss of $17 million and generated $11 million of EBITDA on revenues of $182 
million. Methanol prices have increased in the second quarter of 2002. For      
example, spot prices for methanol in the United States were in the range of $180
to $200 per tonne in the latter part of May 2002.                               

INDUSTRY OVERVIEW 

  Methanol is primarily used as a chemical feedstock in the manufacture of
other products. Roughly three quarters of all methanol is used in the production
of formaldehyde, acetic acid and a wide variety of other chemical derivatives.  
These derivatives are used in the manufacture of a wide range of products       
including building materials, foams, resins and plastics. Reflecting the        
diversity of the end-use products for methanol, growth in methanol demand is    
generally linked to growth in the economy.                                      

     The remainder of methanol demand comes from the fuel sector, principally as
a component in the production of methyl tertiary butyl ether, or MTBE, which is 
blended with gasoline as a source of octane and as an oxygenate to reduce the   
amount of tailpipe emissions from motor vehicles. Worldwide methanol demand for 
use in MTBE was approximately 7.9 million tonnes in 2001 and over half of that  
demand was in the United States. California and other states in the United      
States, as well as the U.S. federal government, have initiated actions that may 
limit, or possibly eliminate, the use of MTBE as a gasoline component in the    
United States. However, in 2001, the European Union confirmed the suitability   
and continued use of MTBE as a fuel additive, and demand for MTBE in Western    
Europe has increased in recent years as clean air standards have been           
implemented.                                                                    

Methanol is an internationally traded commodity. Methanol prices have 
historically been volatile and have been sensitive to overall production        
capacity relative to demand, the price of natural gas feedstock in North America
and general economic conditions. Late in the first quarter and into the second  
quarter of 2002, we believe there have been a number of positive developments,  
including some early signs of a recovery in methanol demand. In addition, we do 
not anticipate that any significant new methanol facilities will start          
commercial production before late 2003.                                         

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OUR COMPETITIVE STRENGTHS 

We believe that our business has the following competitive strengths: 

- GLOBAL PRESENCE AND SCALE -- We believe that we are the only global 
  producer and supplier of methanol. We believe this has enabled us to
secure contracts with high quality global customers and to develop
      current views of the worldwide methanol industry, in turn enabling us to
respond quickly to changing market trends in supply and demand.   

    - LOW COST PRODUCER -- We believe that a low cost structure is critical to
     maintaining a strong competitive position. We believe our access to low
     cost natural gas and our initiatives in reducing our distribution costs
     have allowed us to be a low cost producer of methanol in the markets we
serve.                                                            

  - OPERATIONAL EXPERTISE -- The high reliability rate of our plants is an
     essential factor in keeping our costs low and generating revenue and we
believe it enhances our position as a secure, global provider of  
methanol.                                                         

OUR STRATEGY

 Our primary objective is to maintain and enhance our strong competitive
position. The key elements of our strategy to achieve this objective are:       

     - STRIVING AT ALL TIMES TO FURTHER REDUCE OUR COST STRUCTURE -- We continue
       to take steps to strengthen our position as a low cost global producer of
methanol by constructing new low cost capacity, such as our Atlas 
       facility currently under construction in Trinidad. We are also focused on
    reducing our ocean shipping and other distribution costs by maximizing
       the utilization of our shipping fleet and by seeking to take advantage of
prevailing conditions in the shipping market.                     

 - MAINTAINING OUR WORLD LEADERSHIP IN METHANOL MARKETING, LOGISTICS AND
 SALES -- We sell methanol through an extensive global marketing and
     distribution system, which has enabled us to become the world's largest
      supplier of methanol to each of the major international markets of North
     America, Asia Pacific and Europe, as well as Latin America. We continue
to pursue opportunities which allow us to maintain this market    
leadership.                                                       

  - FOCUSING ON OPERATING EXCELLENCE -- We believe that methanol consumers
view reliability of supply as critical to the success of their    
       businesses. By maintaining and improving our plant operating reliability,
  we believe we have become a preferred supplier of methanol globally.

    - INVESTING IN NEW TECHNOLOGIES AND DEVELOPING NEW MARKETS FOR METHANOL --
We are continuing our efforts to develop opportunities in natural 
gas-based technology innovation and fuel cells where methanol is a
potential fuel.                                                   

- MAINTAINING FINANCIAL DISCIPLINE -- We believe it is important to   
      maintain financial flexibility throughout the economic cycle and we have
deliberately adopted a prudent approach to our liquidity. We have 
similarly established a disciplined approach to capital spending. 

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THE OFFERING

  As used in this summary of the offering, references to "we", "us", "our"
and similar terms, as well as references to "Methanex", refer only to Methanex  
Corporation and its successors and not to any of its subsidiaries.              

ISSUER.....................  Methanex Corporation.                              

NOTES OFFERED..............  $200,000,000 principal amount of 8.75% Senior      
Notes.                

MATURITY...................  August 15, 2012.                                   

ISSUE PRICE................  100% plus accrued interest, if any, from June 19,  
2002.                 

INTEREST...................  Annual rate: 8.75%.                                

INTEREST PAYMENT DATES.....  Semi-annually on February 15 and August 15 of each 
             year, commencing February 15, 2003.

RANKING....................  The Notes will be general unsecured obligations of 
                            Methanex and will rank equally in right of payment
                            with all of our other unsubordinated and unsecured
                            indebtedness, including our 7.40% Notes due August
                           15, 2002 and our 7.75% Notes due August 15, 2005.
                  The Notes, however, will be structurally
                    subordinated to any indebtedness and other
                          liabilities of our subsidiaries. As of March 31,
                          2002, we had no secured debt outstanding and our
                        subsidiaries had approximately $132 million of
liabilities.          

ADDITIONAL AMOUNTS.........  All payments with respect to the Notes made by us  
                           will be made without withholding or deduction for
                         Canadian taxes unless required by law or by the
                            interpretation or administration thereof, in which
                          case, subject to certain exceptions, we will pay
                         such Additional Amounts as may be necessary, so
                           that the net amount received by the holders after
                             such withholding or deduction will not be less than
                         the amount that would have been received in the
                       absence of such withholding or deduction. See
                             "Description of the Notes -- Additional Amounts for
      Canadian Withholding Taxes".

REDEMPTION IN THE EVENT OF                                                      
CHANGES IN CANADIAN                                                             
WITHHOLDING TAXES..........  If we become obligated to pay Additional Amounts as
                        a result of certain changes affecting Canadian
                            withholding taxes, we may redeem all, but not less
                           than all, of the Notes at 100% of their principal
                             amount plus accrued and unpaid interest to the date
                of redemption. See "Description of the
                     Notes -- Redemption for Changes in Canadian
Withholding Taxes".   

MANDATORY OFFER TO                                                              
PURCHASE...................  Upon the occurrence of a Change of Control         
                       Triggering Event, we are required to offer to
                         purchase all outstanding Notes at 101% of their
                           principal amount plus accrued and unpaid interest
                          to the date of purchase. See "Description of the
                           Notes -- Certain Covenants -- Change of Control".

BASIC COVENANTS OF THE                                                          
 INDENTURE................  The Indenture under which we will issue the Notes,
                     which we refer to in this prospectus as the
                           Indenture, will, among other things, restrict our
                   ability and the ability of certain of our
subsidiaries to:      

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-  incur liens;       

                    -  enter into sale/leaseback transactions;

                        -  in the case of certain of our subsidiaries,
                           incur indebtedness without guaranteeing the
Notes;          

                    -  enter into or conduct transactions with
              unrestricted subsidiaries; and

                             -  amalgamate or consolidate with, or merge with or
                             into, or transfer all or substantially all of
          our assets to, any person.

                  These covenants are subject to important
                           qualifications and limitations. For more details,
             see the section "Description of the
      Notes -- Certain Covenants".

USE OF PROCEEDS............  The net proceeds from the sale of the Notes offered
                       hereby are estimated to be approximately $196
                      million. We intend to use approximately $150
                           million of the estimated net proceeds to repay in
                           full our 7.40% Notes due August 15, 2002 upon the
                        maturity of such notes. The balance of the net
                     proceeds will be used for general corporate
                      purposes. Pending such application, such net
                       proceeds will be invested in short-term money
market instruments.   

CONSENT SOLICITATION

     We are soliciting consents from the holders of our existing 7.75% Notes due
August 15, 2005 to amend the Indenture which, if given, would amend the existing
limitation on restricted payments covenant applicable to the 7.75% Notes. Under 
the existing restricted payments covenant, we cannot make restricted payments   
(such as declaring or paying a dividend or making any distribution on our common
shares or repurchasing or redeeming any of our common shares) unless, among     
other things, after giving effect to the restricted payment, our Consolidated   
Net Worth (as defined in the Indenture) is greater than $850 million. The       
proposed amendment to the limitation on restricted payments covenant applicable 
to the 7.75% Notes would allow us to declare and pay, to the extent not         
otherwise permitted by the existing limitation, up to $30 million of cash       
dividends and distributions in respect of our capital stock in any 12 month     
period. If the consent solicitation is successful, the covenants applicable to  
the 7.75% Notes will be substantially the same as those that will be applicable 
to the Notes offered by this prospectus, except that the 7.75% Notes will       
contain a limitation on restricted payments and will not be subject to a change 
of control covenant. The closing of the sale of the Notes and the completion of 
the consent solicitation are not conditional upon each other.                   

RISK FACTORS

     You should carefully consider all of the information in this prospectus. In
particular, you should read the specific risk factors under "Risk Factors" for a
discussion of certain risks involved with an investment in the Notes.           

FINANCIAL STATEMENT PRESENTATION

     Our consolidated financial statements are reported in United States dollars
but have been prepared in accordance with accounting principles generally       
accepted in Canada, or Canadian GAAP. To the extent applicable to our           
consolidated financial statements, these principles conform in all material     
respects with accounting principles generally accepted in the United States, or 
U.S. GAAP, except as described in the supplemental information to our           
consolidated financial statements included elsewhere in this prospectus.        

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SUMMARY HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA

You should read the summary historical consolidated financial data set
forth below in conjunction with our consolidated financial statements and the   
related notes and "Management's Discussion and Analysis" included elsewhere in  
this prospectus. The statement of income data and the balance sheet data as at  
and for the three years ended December 31, 2001, have been derived from our     
annual consolidated financial statements, which for the two years ended December
31, 2001, are included elsewhere in this prospectus. The statement of income    
data for the three months ended March 31, 2001 and 2002 and the balance sheet   
data as at March 31, 2002 have been derived from our unaudited interim          
consolidated financial statements included elsewhere in this prospectus. The    
financial information as at and for the three months ended March 31, 2001 and   
2002 includes, in the opinion of our management, all adjustments which are      
necessary for the fair presentation of this unaudited financial information. The
interim results may not be indicative of the results for a full year.           

                                                        [Enlarge/Download Table]

                                                                                             THREE MONTHS   
                                                                  FISCAL YEAR ENDED              ENDED      
                                                                    DECEMBER 31,               MARCH 31,    
                                                             ---------------------------   -----------------
                                                              1999      2000      2001      2001      2002  
                                                             -------   -------   -------   -------   -------
                                                               (IN MILLIONS, EXCEPT VOLUME AND PRICE DATA)  
                                                                                                            
STATEMENT OF INCOME DATA:                                                                                   
Canadian GAAP                                                                                               
  Revenue................................................... $  695    $1,061    $1,149    $  373    $  182 
  Cost of sales and operating expenses......................    689       756       911       250       171 
  Depreciation and amortization.............................    112       110       113        27        28 
                                                             ------    ------    ------    ------    ------ 
  Operating income (loss) before undernoted items...........   (106)      195       125        96       (17)
  Interest expense..........................................     25        32        32         8         7 
  Interest and other income.................................     14        16        19         4         2 
  Other expense(1)..........................................     69        --        11        --        -- 
                                                             ------    ------    ------    ------    ------ 
  Income (loss) before income taxes.........................   (186)      179       101        92       (22)
  Income tax recovery (expense)(2)..........................     36       (34)      (30)      (23)        5 
                                                             ------    ------    ------    ------    ------ 
  Net income (loss)......................................... $ (150)   $  145    $   71    $   69    $  (17)
                                                             ======    ======    ======    ======    ====== 
U.S. GAAP(3)                                                                                                
  Net income (loss)......................................... $ (128)   $   89    $   69       N/A       N/A 
                                                             ======    ======    ======                     
BALANCE SHEET DATA (END OF PERIOD):                                                                         
Canadian GAAP                                                                                               
  Cash and cash equivalents................................. $  152    $  226    $  332    $  334    $  287 
  Total assets..............................................  1,644     1,803     1,693     1,895     1,624 
  Total debt................................................    399       399       399       399       399 
  Shareholders' equity......................................    956     1,045       935     1,119       900 
U.S. GAAP(3)                                                                                                
  Total assets.............................................. $1,821    $1,938    $1,843       N/A       N/A 
  Shareholders' equity......................................  1,079     1,108       985       N/A       N/A 
OTHER FINANCIAL DATA:                                                                                       
Canadian GAAP                                                                                               
  EBITDA(4)................................................. $    6    $  305    $  238    $  123    $   11 
  Capital expenditures:                                                                                     
    Capital maintenance, catalyst, turnarounds and                                                          
      other(5).............................................. $   66    $   25    $   19    $    5    $    3 
    Plants and equipment under development(6)...............     72        --        60        --        34 
                                                             ------    ------    ------    ------    ------ 
  Total capital expenditures................................ $  138    $   25    $   79    $    5    $   37 
U.S. GAAP(3)                                                                                                
  EBITDA(4)................................................. $   30    $  273    $  258       N/A       N/A 
OTHER SELECTED OPERATING DATA:                                                                              
Methanol production volume (thousands of tonnes):...........  5,343     6,007     5,361     1,379     1,365 
Methanol sales volume (thousands of tonnes):                                                                
    Produced product........................................  5,338     5,815     5,390     1,245     1,431 
    Purchased product.......................................  1,255       814     1,280       405       195 
    Commission sales........................................     --       142       720       221       157 
                                                             ------    ------    ------    ------    ------ 
  Total methanol sales volume...............................  6,593     6,771     7,390     1,871     1,783 
                                                             ======    ======    ======    ======    ====== 
Methanex average realized methanol price (dollars per                                                       
  tonne).................................................... $  105    $  160    $  172    $  225    $  111 

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(1) Other expense for 1999 consists of $55 million related to the write off of  
the book value of our Kitimat plant and $14 million related to a        
  restructuring to obtain 100% ownership of the Fortier plant. Other expense
  for 2001 consists of $11 million for employee severance and mothball costs
related to the shutdown for an indeterminate period of our Medicine Hat 
Plant 3.                                                                

(2) We adopted the asset and liability method of accounting for income taxes on 
 January 1, 2000 without restatement of prior periods. As a result of this
   change, we recorded an increase to shareholders' equity of approximately $4
million at January 1, 2000.                                             

(3) As a foreign private issuer under U.S. securities laws, we prepare an annual
   reconciliation with U.S. GAAP which is provided as supplemental information
  to our annual consolidated financial statements included elsewhere in this
  prospectus. We are not required to prepare a quarterly reconciliation with
 U.S. GAAP and therefore U.S. GAAP figures have not been presented for the
three month periods ended March 31, 2001 and 2002.                      

(4) EBITDA represents net income (loss) before income taxes, interest expense,  
    interest and other income, depreciation and amortization, and other expense,
which includes asset write downs and asset restructuring charges. EBITDA
   should be considered in addition to, and not as a substitute for, operating
income, net income (loss), cash flows and other measures of financial   
performance reported in accordance with generally accepted accounting   
   principles. EBITDA differs from cash flows from operating activities before
  changes in non-cash working capital and the utilization of prepaid natural
 gas primarily because it does not include cash flows from interest, taxes
  and asset restructuring charges. Our method of computing EBITDA may not be
comparable to similarly titled measures reported by other companies. The
following table shows a reconciliation of EBITDA to net income (loss):  

                                                        [Enlarge/Download Table]

                                                                            THREE MONTHS   
                                                   FISCAL YEAR ENDED            ENDED      
                                                      DECEMBER 31,            MARCH 31,    
                                                ------------------------   --------------- 
                                                 1999     2000     2001     2001     2002  
                                                ------   ------   ------   ------   ------ 
                                                              (IN MILLIONS)                
                                                                                           
Net income (loss).............................. $ (150)  $  145   $   71   $   69   $  (17)
Add (deduct):                                                                              
  Income tax expense (recovery)................    (36)      34       30       23       (5)
  Interest expense.............................     25       32       32        8        7 
  Interest and other income....................    (14)     (16)     (19)      (4)      (2)
  Other expense................................     69       --       11       --       -- 
  Depreciation and amortization................    112      110      113       27       28 
                                                ------   ------   ------   ------   ------ 
EBITDA -- Canadian GAAP........................ $    6   $  305   $  238   $  123   $   11 
  U.S. GAAP adjustments(3).....................     24      (32)      20      N/A      N/A 
                                                ------   ------   ------   ------   ------ 
EBITDA -- U.S. GAAP(3)......................... $   30   $  273   $  258      N/A      N/A 

(5) We schedule a shutdown and inspection of each of our plants at intervals of 
three or more years to perform necessary maintenance and replacement of 
catalysts (a process commonly known as a turnaround). The amounts shown 
represent cash flows in the period.                                     

(6) Plants and equipment under development for 1999 related to the completion of
our Chile III plant. Plants and equipment under development for 2001    
   consists of $55 million related to our 63.1% interest in the Atlas methanol
facility under construction in Trinidad and $5 million related to the   
    development of potential new methanol facilities in Chile and Australia. The
amounts shown represent cash flows in the period.                       

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 

     Certain statements contained in this prospectus constitute "forward-looking
statements" within the meaning of the United States Private Securities          
Litigation Reform Act of 1995. When used in this prospectus, the words "may",   
"would", "could", "will", "intend", "plan", "anticipate", "believe", "estimate",
"expect", and similar expressions, as they relate to us or our management, are  
intended to identify forward-looking statements. These statements reflect our   
current views with respect to future events and are subject to certain risks,   
uncertainties and assumptions. Many factors could cause our actual results,     
performance or achievements to be materially different from any future results, 
performance or achievements that may be expressed or implied by such            
forward-looking statements, including the following, which are discussed in     
greater detail under the heading "Risk Factors":                                

     - cyclicality of the industry in which we operate and the volatility of the
price of methanol;                                                

- decreases in global gross domestic product and changes in general   
economic conditions;                                              

- uncertainty of demand for MTBE;                                     

- competition in our industry;                                        

    - fluctuations in the cost and reductions in the availability of supply of
natural gas;                                                      

 - the risks attendant with methanol production and marketing, including
operational disruption;                                           

- changes in laws or regulations relating to the protection of the    
environment;                                                      

- risks associated with investments and operations in multiple        
jurisdictions;                                                    

- foreign exchange risks; and                                         

    - our inability to obtain project financing planned for our Atlas project.

   Should one or more of these risks or uncertainties materialize, or should
assumptions underlying the forward-looking statements prove incorrect, actual   
results, performance or achievements may vary materially from those described   
herein as intended, planned, anticipated, believed, estimated or expected. We do
not intend, and do not assume any obligation, to update these forward-looking   
statements.                                                                     

REFERENCE INFORMATION 

Approximate conversions of certain units of measurement used in this  
prospectus into alternative units of measurement are as follows:                

                                                                [Download Table]
                                                                                  
1 tonne              =  2,205 pounds or 1,000 kilograms                           
1 tonne of methanol  =  332.6 U.S. gallons                                        
1 gigajoule          =  0.948 million British thermal units or approximately 1,000
                        standard cubic feet of natural gas calculated on a higher 
                        heating value basis                                       
1 petajoule          =  1,000,000 gigajoules                                      

Historical price data and supply and demand statistics for methanol   
contained in this prospectus are derived by us from recognized industry reports 
regularly published by independent consulting and data compilation organizations
in the methanol industry, including Chemical Market Associates Inc., or CMAI,   
DeWitt & Company Incorporated and Tecnon (UK) Ltd.                              

Responsible Care(R) is a registered trademark of the Canadian Chemical
Producers' Association and is used by us under license.                         

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RISK FACTORS

   You should carefully consider the risk factors set forth below as well as
the other information contained in this prospectus before purchasing the Notes  
offered by this prospectus. Any of the following risks, as well as risks and    
uncertainties currently not known to us, could materially adversely affect our  
business, financial condition or results of operations. Certain statements under
this caption constitute forward-looking statements. See "Special Note Regarding 
Forward-Looking Statements".                                                    

RISKS RELATED TO OUR BUSINESS AND OUR INDUSTRY

WE OPERATE IN A CYCLICAL COMMODITY INDUSTRY AND OUR FINANCIAL PERFORMANCE IS    
PRINCIPALLY DEPENDENT ON THE SELLING PRICE OF METHANOL.                         

   The methanol business is a commodity industry, typically characterized by
cycles of oversupply resulting in lower prices, idling of capacity and lower    
operating rates, followed by periods in which demand exceeds supply, resulting  
in shortages and rising prices until the increased prices lead to new plant     
investment or the re-start of idled capacity. Methanol prices have historically 
been, and are expected to continue to be, characterized by significant          
volatility. New methanol plants are expected to be built which will increase    
overall production capacity. Additional methanol supply can become available in 
the future by re-starting idle methanol plants, by carrying out major expansions
of existing plants or by debottlenecking existing plants to increase their      
production capacity. Roughly three quarters of world methanol demand comes from 
its use in the production of formaldehyde, acetic acid and other chemical       
derivatives. Demand for methanol as a feedstock for these chemical derivatives  
is in large part dependent upon levels of global gross domestic product and     
changes in general economic conditions. The remainder of world methanol demand  
comes from its use as a feedstock for MTBE, the future demand for which is      
uncertain.                                                                      

   We are not able to predict future methanol supply/demand balances, market
conditions or prices, all of which are affected by numerous factors beyond our  
control. As a result, we cannot assure you that demand for methanol will        
increase at all, or sufficiently to absorb additional production, or that the   
price of methanol will not decline. Since methanol is the only product we       
produce and market, a decline in the price of methanol could have an adverse    
effect on our financial performance.                                            

THE FUTURE DEMAND FOR METHANOL IN THE PRODUCTION OF MTBE IS UNCERTAIN.          

Approximately 15% of world methanol demand comes from its use as a    
feedstock for MTBE in the United States. Concerns have been raised in the United
States regarding the use of MTBE in gasoline, principally as a result of leaking
underground gasoline storage tanks and resultant detection of MTBE in drinking  
water. In March 1999, the Governor of California announced a ban on the use of  
MTBE as a gasoline component in California commencing January 1, 2003. This     
deadline has recently been extended to January 1, 2004. Other states in the     
United States have also taken actions that limit the use of MTBE as a gasoline  
component. Additionally, in April 2002, the U.S. Senate passed a comprehensive  
energy bill that includes a provision to ban MTBE in the United States within   
four years of its enactment. The U.S. House of Representatives has also passed  
an energy bill, but it does not contain a provision to ban MTBE. The Senate and 
the House must proceed to conference to determine whether energy legislation can
be agreed upon and passed by the whole U.S. Congress. It is likely that         
executive and legislative actions will reduce, or possibly eliminate, the demand
for methanol for MTBE in the United States, which could have an adverse effect  
on our results of operations and financial condition.                           

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COMPETITION FROM OTHER METHANOL PRODUCERS IS INTENSE AND COULD REDUCE OUR MARKET
SHARE AND HARM OUR FINANCIAL PERFORMANCE.                                       

     The methanol industry is highly competitive. Methanol is a global commodity
and customers base their purchasing decisions principally on the delivered price
of methanol and reliability of supply. Some of our competitors are not dependent
for revenues on a single product and some have greater financial resources than 
we do. These competitors may be better able than we are to withstand price      
competition and volatile market conditions.                                     

WE ARE VULNERABLE TO REDUCTIONS IN THE AVAILABILITY OF SUPPLY AND FLUCTUATIONS  
IN THE COST OF NATURAL GAS.                                                     

Natural gas is the principal feedstock for methanol and accounts for a
significant portion of its total production cost. Accordingly, our results from 
operations depend in large part on the availability and security of supply and  
price of natural gas. If we are unable to obtain continued access to sufficient 
natural gas for any of our plants on commercially acceptable terms, we could be 
forced to reduce production or close plants, which would have a material adverse
effect on our results of operations and financial condition.                    

    Approximately 50% of our capacity currently operating is in Chile. Natural
gas for our three plants located at our Chilean facility, Chile I, Chile II and 
Chile III, is supplied through long term contracts with the Chilean state-owned 
energy company and suppliers in Argentina. These contracts expire in 2009 for   
Chile I, 2016 and 2017 for Chile II and 2019 for Chile III. Although the Chilean
facility is located close to other natural gas reserves in Chile and Argentina, 
which we believe we could access after the expiration or early termination of   
these natural gas supply contracts, we cannot assure you that we would be able  
to secure access to such natural gas under long term contracts on commercially  
acceptable terms, if at all.                                                    

  Approximately 40% of our capacity currently operating is in New Zealand.
Approximately 85% of the contracted natural gas for our New Zealand facilities  
comes from the off-shore Maui field. We estimate that our current contracted    
natural gas entitlements are sufficient to operate our New Zealand plants at    
capacity for the equivalent of approximately two and one-half years. Towards the
end of 2001, the owners of the Maui field announced that the Maui reserves may  
be materially less than previously estimated and below the aggregate of         
quantities that they have contracted to provide to their customers, including   
us. The contractual process to determine the available reserves in the Maui     
field is expected to be completed by the end of 2002. If the currently revised  
estimates are confirmed, we may have to reduce production at or close some or   
all of our New Zealand plants. We are pursuing additional natural gas supply for
our New Zealand plants. However, we cannot assure you we will be able to secure 
additional natural gas on commercially acceptable terms, if at all.             

    Approximately 10% of our capacity currently operating is in North America.
Natural gas for our North American facilities is currently purchased on a short 
term basis. North American natural gas prices are set in a competitive market   
and can fluctuate widely. Any sustained increase in natural gas prices would    
adversely affect the operating margins and competitive position of our North    
American facilities.                                                            

OUR BUSINESS IS SUBJECT TO MANY OPERATIONAL RISKS FOR WHICH WE MAY NOT BE       
ADEQUATELY INSURED.                                                             

    The majority of our revenues is derived from the sale of methanol produced
at our plants. Our business is subject to the risks of operating methanol       
production facilities, such as unforeseen equipment breakdowns, interruptions in
the supply of natural gas, power failures, loss of port facilities or any other 
event, including any event of force majeure, which could result in a prolonged  
shutdown of any of our plants. A prolonged plant shutdown at any of our major   
facilities could materially affect our revenues and operating income.           
Additionally, disruptions in                                                    
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our distribution system could adversely affect our revenues and operating       
income. Although we maintain insurance, including business interruption         
insurance, we cannot assure you that we will not incur losses beyond the limits 
of, or outside the coverage of, such insurance. From time to time, various types
of insurance for companies in the chemical and petrochemical industries have not
been available on commercially acceptable terms or, in some cases, have been    
unavailable. We cannot assure you that in the future we will be able to maintain
existing coverage or that premiums will not increase substantially.             

GOVERNMENT REGULATIONS RELATING TO THE PROTECTION OF THE ENVIRONMENT COULD      
INCREASE OUR COSTS OF DOING BUSINESS.                                           

     The countries in which we operate have laws and regulations to which we are
subject governing the environment and the sustainable management of natural     
resources as well as the handling, storage, transportation and disposal of      
hazardous or waste materials. We are also subject to laws and regulations       
governing the import, export, use, discharge, storage, disposal and             
transportation of toxic substances. The products we use and produce are subject 
to regulation under various health, safety and environmental laws.              
Non-compliance with any of these laws and regulations may give rise to work     
orders, fines, injunctions, civil liability and criminal sanctions.             

    Laws and regulations protecting the environment have become more stringent
in recent years and may, in certain circumstances, impose absolute liability    
rendering a person liable for environmental damage without regard to negligence 
or fault on the part of such person. These laws and regulations may also expose 
us to liability for the conduct of, or conditions caused by, others, or for our 
own acts which complied with applicable laws at the time such acts were         
performed. The operation of chemical manufacturing plants exposes us to risks in
connection with compliance with such laws and we cannot assure you that we will 
not incur material costs or liabilities.                                        

WE ARE SUBJECT TO RISKS INHERENT IN FOREIGN OPERATIONS.                         

We currently have substantial operations outside of North America,    
including in Chile, New Zealand, Europe and Asia. We are subject to risks       
inherent in foreign operations, such as: loss of revenue, property and equipment
as a result of expropriation, nationalization, war, insurrection and other      
political risks; increases in duties, taxes and governmental royalties and      
renegotiation of contracts with governmental entities; as well as changes in    
laws and policies governing operations of foreign-based companies.              

In addition, because we derive substantially all of our revenues from 
production and sales by subsidiaries outside of Canada, the payment of dividends
or the making of other cash payments or advances by these subsidiaries to us may
be subject to restrictions or exchange controls on the transfer of funds in or  
out of the respective countries or result in the imposition of taxes on such    
payments or advances. We have organized our foreign operations in part based on 
certain assumptions about various tax laws (including capital gains and         
withholding taxes), foreign currency exchange and capital repatriation laws and 
other relevant laws of a variety of foreign jurisdictions. While we believe that
such assumptions are reasonable, we cannot assure you that foreign taxing or    
other authorities will reach the same conclusion. Further, if such foreign      
jurisdictions were to change or modify such laws, we could suffer adverse tax   
and financial consequences.                                                     

We source a substantial portion of the natural gas used in our Chilean
facility from Argentina. The economic and political situation in Argentina has  
recently been unstable. Should the economic or political situation in Argentina 
result in a reduction of the supply of natural gas, our Chilean operations could
suffer financial losses and we cannot assure you that we would be able to       
replace lost Argentinean supply on commercially acceptable terms, if at all.    

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     Trade in methanol is subject to import duties in a number of jurisdictions.
We currently incur an import duty of 3.5% on Chilean methanol that we sell into 
the European Community and an 8% duty on New Zealand and Chilean methanol that  
we sell into the United States. Although we do not currently pay any duties in  
any other major market to which we export product, we cannot assure you that    
such duties will not be levied in the future or, if levied, that we would be    
able to mitigate the impact of such duties.                                     

WE ARE EXPOSED TO FLUCTUATIONS IN FOREIGN CURRENCIES.                           

     Most of our revenues are denominated in U.S. dollars. A significant portion
of our costs, however, are incurred in other currencies, principally the New    
Zealand dollar and the Canadian dollar and, to a lesser extent, the Chilean     
peso. We are exposed to increases in the value of these currencies in relation  
to the U.S. dollar which could have the effect of increasing the U.S. dollar    
equivalent of our cost of sales and operating expenses. We also have some       
revenues in Euros and British pounds. We are exposed to declines in the value of
these currencies compared to the U.S. dollar which could have the effect of     
decreasing the U.S. dollar equivalent of our revenues.                          

WE CANNOT ASSURE YOU THAT WE WILL OBTAIN THE PROJECT FINANCING PLANNED FOR OUR  
ATLAS PROJECT.                                                                  

In a joint venture with BP, we are currently building our new Atlas   
methanol plant in Trinidad, which we expect will commence commercial operation  
by late 2003. The total capital cost of Atlas, including financing costs, is    
expected to be approximately $400 million. Our share of this cost is estimated  
to be approximately $250 million which we expect to fund from a planned project 
financing, cash generated from operations and cash on hand. Our total equity    
contribution to the Atlas joint venture, assuming the project financing is      
arranged as planned, is expected to be approximately $100 million, of which $66 
million had been funded at March 31, 2002. We cannot assure you that we will be 
able to obtain the planned project financing on satisfactory terms, or at all.  
Our inability to obtain this financing or other alternative financing would     
reduce our liquidity and could limit, or affect the timing of, our ability to   
undertake other potential new methanol projects.                                

RISKS RELATED TO THE NOTES AND OUR STRUCTURE

OUR STRUCTURE AS A HOLDING COMPANY COULD ADVERSELY AFFECT OUR ABILITY TO MEET   
OUR OBLIGATIONS UNDER THE NOTES.                                                

We are primarily a holding company with limited material business     
operations, sources of income or assets of our own other than the shares of our 
subsidiaries. The Notes will be our obligations exclusively. Unless certain     
covenants in the Indenture become applicable, our subsidiaries will not         
guarantee the payment of principal or of interest on the Notes and the Notes    
will therefore be structurally subordinated to the obligations of our           
subsidiaries as a result of our being structured as a holding company. In the   
event of an insolvency, liquidation or other reorganization of any of our       
subsidiaries, our creditors (including the holders of the Notes) will not have  
any right to proceed against the assets of that subsidiary or to cause the      
liquidation or bankruptcy of such subsidiary under applicable bankruptcy laws.  
Creditors of such subsidiary would be entitled to payment in full from its      
assets before we would be entitled to receive any distribution from such assets.
Except to the extent that we may ourselves be a creditor with recognized claims 
against a subsidiary, claims of creditors of that subsidiary will have priority 
with respect to the assets and earnings of that subsidiary over the claims of   
our creditors, including claims under the Notes. As of March 31, 2002, our      
subsidiaries had approximately $132 million of liabilities.                     

  In addition, as a result of our holding company structure, our operating
cash flow and our ability to service our debt, including the Notes, are         
dependent upon the operating cash flow of                                       
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our subsidiaries and the payment of funds by our subsidiaries to us in the form 
of dividends, loans or otherwise. Our subsidiaries are distinct legal entities  
and have no obligation, contingent or otherwise, to pay any amounts due pursuant
to the Notes or to make any funds available therefor, whether by dividends,     
interest, loans, advances or other payments. In addition, the payment of        
dividends and the making of loans, advances and other payments to us by our     
subsidiaries may be subject to statutory or contractual restrictions, are       
contingent upon the earnings of our subsidiaries and are subject to various     
business and other considerations.                                              

OUR DEBT SERVICE REQUIREMENTS MAY AFFECT OUR ABILITY TO FUND OUR BUSINESS.      

    As at March 31, 2002, after giving effect to the sale of the Notes offered
by this prospectus and the application of the net proceeds thereof, we would    
have had total indebtedness of $450 million. The Indenture and our credit       
facility permit us and our subsidiaries to incur additional indebtedness,       
including secured indebtedness, subject to limitations. Our level of            
indebtedness could increase our vulnerability to general adverse economic and   
industry conditions, place us at a disadvantage compared to our competitors that
have less debt, and limit our flexibility in planning for, or reacting to,      
changes in our business and industry.                                           

Our ability to make payments on and to refinance our indebtedness,    
including the Notes, and to fund our operations, working capital and capital    
expenditures will depend on our ability to generate cash in the future. This is 
subject to general economic, industry, financial, competitive, legislative,     
regulatory and other factors that are beyond our control. In particular, global 
or regional economic conditions could cause the price of methanol to fall and   
hamper our ability to make interest payments on or repay our indebtedness,      
including the Notes. We may need to refinance all or a portion of our           
indebtedness, including the Notes, on or before maturity. We cannot assure you  
that we will be able to refinance any of our indebtedness, including the Notes, 
on commercially acceptable terms, if at all.                                    

WE MAY NOT BE ABLE TO FINANCE AN OFFER TO PURCHASE THE NOTES AND OTHER          
INDEBTEDNESS UPON THE OCCURRENCE OF A CHANGE OF CONTROL TRIGGERING EVENT.       

    Upon the occurrence of a Change of Control Triggering Event, as defined in
the Indenture, we will be required to offer to purchase all outstanding Notes at
a price in cash equal to 101% of the aggregate principal amount of the Notes,   
plus accrued and unpaid interest thereon. See "Description of the               
Notes -- Certain Covenants -- Change of Control". If the consent solicitation   
with respect to our 7.75% Notes is successful, we will also be required to offer
to purchase such notes on the same basis. However, we may not have sufficient   
funds at the time to make the required purchase of these securities.            

BECAUSE WE ARE A CANADIAN COMPANY, IT MAY BE DIFFICULT FOR YOU TO ENFORCE       
LIABILITIES AGAINST US BASED SOLELY UPON THE FEDERAL SECURITIES LAWS OF THE     
UNITED STATES.                                                                  

We are organized under the laws of Canada and our principal executive 
office is located in Vancouver, British Columbia. The majority of our directors 
and officers, and the experts named in this prospectus, are residents of Canada,
and a substantial portion of their assets and our assets are located outside the
United States. As a result, it may be difficult for you to effect service of    
process within the United States upon the directors, officers and experts, or to
enforce judgments of United States courts based upon civil liability under the  
federal securities laws of the United States against them. There is doubt as to 
the enforceability in Canada of judgments against us or against any of our      
directors, officers or experts, in original actions or in actions for           
enforcement of judgments of United States courts, based solely upon the federal 
securities laws of the United States.                                           

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THERE IS CURRENTLY NO ACTIVE TRADING MARKET FOR THE NOTES. IF AN ACTIVE TRADING 
MARKET DOES NOT DEVELOP FOR THE NOTES, YOU MAY NOT BE ABLE TO RESELL THEM.      

No active trading market currently exists for the Notes and none may  
develop. We do not intend to apply for the listing of the Notes on any          
securities exchange or quotation system. As a result, an active trading market  
may not develop for the Notes. If an active trading market for the Notes does   
not develop, it could have an adverse effect on the market price and your       
ability to resell the Notes.                                                    

ONE OF OUR SIGNIFICANT SHAREHOLDERS MAY HAVE INTERESTS WHICH CONFLICT WITH THE  
INTERESTS OF OUR DEBTHOLDERS.                                                   

NOVA Chemicals Corporation is our largest shareholder and held        
approximately 37% of our outstanding common shares as of March 31, 2002. See    
"Principal Shareholders". As a result, NOVA has the ability to determine the    
outcome of certain corporate actions requiring approval of our common           
shareholders, including the adoption of certain amendments to our Articles of   
Continuance and the approval of mergers and sales of all or substantially all of
our assets. Under the corporations law governing us, transactions of this type  
require the approval of 66 2/3% of the holders of our common shares. As with    
other shareholders, NOVA's interests in our business, operations and financial  
condition may not be aligned or may conflict with your interests.               

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USE OF PROCEEDS 

 We estimate the net proceeds from the sale of the Notes offered by this
prospectus, after deducting estimated underwriting commissions and expenses,    
will be approximately $196 million. We intend to use approximately $150 million 
of the estimated net proceeds to repay in full our 7.40% Notes due August 15,   
2002 upon the maturity of such notes. The balance of the net proceeds will be   
used for general corporate purposes. Pending such application, such net proceeds
will be invested in short-term money market instruments.                        

CONSOLIDATED CAPITALIZATION 

The following table sets forth our cash and cash equivalents and our  
capitalization as of March 31, 2002 (1) on an actual basis and (2) as adjusted  
to reflect the sale of the Notes offered by this prospectus and the application 
of the estimated net proceeds thereof as described in "Use of Proceeds". This   
table should be read in conjunction with "Management's Discussion and Analysis",
"Description of Certain Indebtedness" and our unaudited interim consolidated    
financial statements and related notes appearing elsewhere in this prospectus.  

                                                        [Enlarge/Download Table]

                                                               AS OF MARCH 31, 2002  
                                                             ------------------------
                                                               ACTUAL     AS ADJUSTED
                                                             ----------   -----------
                                                                  (IN THOUSANDS)     
                                                                                     
Cash and cash equivalents................................... $  286,616   $  332,616 
                                                             ==========   ========== 
Short term debt:                                                                     
  7.40% Notes due August 15, 2002........................... $  149,909           -- 
                                                             ----------   ---------- 
Long term debt:                                                                      
  Senior unsecured credit facility(1).......................         --           -- 
  7.75% Notes due August 15, 2005........................... $  249,595   $  249,595 
  Notes offered by this prospectus..........................         --      200,000 
                                                             ----------   ---------- 
     Total long term debt................................... $  249,595   $  449,595 
                                                             ----------   ---------- 
     Total debt............................................. $  399,504   $  449,595 
                                                             ----------   ---------- 
Shareholders' equity:                                                                
  Capital stock............................................. $  526,555   $  526,555 
  Retained earnings.........................................    373,370      373,370 
                                                             ----------   ---------- 
     Total shareholders' equity............................. $  899,925   $  899,925 
                                                             ----------   ---------- 
Total capitalization........................................ $1,299,429   $1,349,520 
                                                             ==========   ========== 

---------------                                                                 

(1) Total availability of $291 million, expiring January 2004.                  

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA 

 You should read the selected historical consolidated financial data set
forth below in conjunction with our consolidated financial statements and the   
related notes and "Management's Discussion and Analysis" included elsewhere in  
this prospectus. The statement of income data and the balance sheet data as at  
and for the five years ended December 31, 2001, have been derived from our      
annual consolidated financial statements, which for the two years ended December
31, 2001, are included elsewhere in this prospectus. The statement of income    
data for the three months ended March 31, 2001 and 2002 and the balance sheet   
data as at March 31, 2002, have been derived from our unaudited interim         
consolidated financial statements included elsewhere in this prospectus. The    
financial information as at and for the three months ended March 31, 2001 and   
2002 includes, in the opinion of our management, all adjustments which are      
necessary for the fair presentation of this unaudited financial information. The
interim results may not be indicative of the results for a full year.           

                                                        [Enlarge/Download Table]

                                                                                      THREE MONTHS   
                                                                                          ENDED      
                                              FISCAL YEAR ENDED DECEMBER 31,            MARCH 31,    
                                        ------------------------------------------   --------------- 
                                         1997     1998     1999     2000     2001     2001     2002  
                                        ------   ------   ------   ------   ------   ------   ------ 
                                                (IN MILLIONS, EXCEPT VOLUME AND PRICE DATA)          
                                                                                                     
STATEMENT OF INCOME DATA:                                                                            
Canadian GAAP                                                                                        
  Revenue.............................. $1,299   $  721   $  695   $1,061   $1,149   $  373   $  182 
  Cost of sales and operating                                                                        
    expenses...........................    931      704      689      756      911      250      171 
  Depreciation and amortization........    117      107      112      110      113       27       28 
                                        ------   ------   ------   ------   ------   ------   ------ 
  Operating income (loss) before                                                                     
    undernoted items...................    251      (90)    (106)     195      125       96      (17)
  Interest expense.....................     32       22       25       32       32        8        7 
  Interest and other income............     34       26       14       16       19        4        2 
  Other expense(1).....................     --       --       69       --       11       --       -- 
                                        ------   ------   ------   ------   ------   ------   ------ 
  Income (loss) before income taxes....    253      (86)    (186)     179      101       92      (22)
  Income tax recovery (expense)(2).....    (51)      18       36      (34)     (30)     (23)       5 
                                        ------   ------   ------   ------   ------   ------   ------ 
  Net income (loss).................... $  202   $  (68)  $ (150)  $  145   $   71   $   69   $  (17)
                                        ======   ======   ======   ======   ======   ======   ====== 
U.S. GAAP(3)                                                                                         
  Net income (loss).................... $  187   $ (100)  $ (128)  $   89   $   69      N/A      N/A 
                                        ======   ======   ======   ======   ======                   
BALANCE SHEET DATA (END OF PERIOD):                                                                  
Canadian GAAP                                                                                        
  Cash and cash equivalents............ $  492   $  288   $  152   $  226   $  332   $  334   $  287 
  Total assets.........................  1,973    1,799    1,644    1,803    1,693    1,895    1,624 
  Total debt...........................    398      399      399      399      399      399      399 
  Shareholders' Equity.................  1,191    1,108      956    1,045      935    1,119      900 
U.S. GAAP(3)                                                                                         
  Total assets......................... $2,203   $2,002   $1,821   $1,938   $1,843      N/A      N/A 
  Shareholders' Equity.................  1,323    1,208    1,079    1,108      985      N/A      N/A 

OTHER FINANCIAL DATA:                                                                                
Canadian GAAP                                                                                        
  EBITDA(4)............................ $  368   $   17   $    6   $  305   $  238   $  123   $   11 
  Capital expenditures:                                                                              
    Capital maintenance, catalyst,                                                                   
      turnarounds and other(5)......... $   22   $   49   $   66   $   25   $   19   $    5   $    3 
    Plants and equipment under                                                                       
      development(6)...................     89      167       72       --       60       --       34 
                                        ------   ------   ------   ------   ------   ------   ------ 
  Total capital expenditures........... $  111   $  216   $  138   $   25   $   79   $    5   $   37 
                                        ======   ======   ======   ======   ======   ======   ====== 
U.S. GAAP(3)                                                                                         
  EBITDA(4)............................ $  342   $   (3)  $   30   $  273   $  258      N/A      N/A 

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                                                                                      THREE MONTHS  
                                                                                          ENDED     
                                              FISCAL YEAR ENDED DECEMBER 31,            MARCH 31,   
                                        ------------------------------------------   ---------------
                                         1997     1998     1999     2000     2001     2001     2002 
                                        ------   ------   ------   ------   ------   ------   ------
                                                (IN MILLIONS, EXCEPT VOLUME AND PRICE DATA)         
                                                                                                    
OTHER SELECTED OPERATING DATA:                                                                      
Methanol production volume (thousands                                                               
  of tonnes):..........................  5,092    4,690    5,343    6,007    5,361    1,379    1,365
Methanol sales volume (thousands of                                                                 
  tonnes):                                                                                          
    Produced product...................  5,049    4,479    5,338    5,815    5,390    1,245    1,431
    Purchased product..................  1,854    1,532    1,255      814    1,280      405      195
    Commission sales...................     --       --       --      142      720      221      157
                                        ------   ------   ------   ------   ------   ------   ------
  Total methanol sales volume..........  6,903    6,011    6,593    6,771    7,390    1,871    1,783
                                        ======   ======   ======   ======   ======   ======   ======
Methanex average realized methanol                                                                  
  price (dollars per tonne)............ $  187   $  120   $  105   $  160   $  172   $  225   $  111

---------------                                                                 

(1) Other expense for 1999 consists of $55 million related to the write off of  
the book value of our Kitimat plant and $14 million related to a        
  restructuring to obtain 100% ownership of the Fortier plant. Other expense
  for 2001 consists of $11 million for employee severance and mothball costs
related to the shutdown for an indeterminate period of our Medicine Hat 
Plant 3.                                                                

(2) We adopted the asset and liability method of accounting for income taxes on 
 January 1, 2000 without restatement of prior periods. As a result of this
   change, we recorded an increase to shareholders' equity of approximately $4
million at January 1, 2000.                                             

(3) As a foreign private issuer under U.S. securities laws, we prepare an annual
   reconciliation with U.S. GAAP which is provided as supplemental information
  to our annual consolidated financial statements included elsewhere in this
  prospectus. We are not required to prepare a quarterly reconciliation with
 U.S. GAAP and therefore U.S. GAAP figures have not been presented for the
three month periods ended March 31, 2001 and 2002.                      

(4) EBITDA represents net income (loss) before income taxes, interest expense,  
    interest and other income, depreciation and amortization, and other expense,
which includes asset write downs and asset restructuring charges. EBITDA
   should be considered in addition to, and not as a substitute for, operating
income, net income (loss), cash flows and other measures of financial   
performance reported in accordance with generally accepted accounting   
   principles. EBITDA differs from cash flows from operating activities before
  changes in non-cash working capital and the utilization of prepaid natural
 gas primarily because it does not include cash flows from interest, taxes
  and asset restructuring charges. Our method of computing EBITDA may not be
comparable to similarly titled measures reported by other companies. The
following table shows a reconciliation of EBITDA to net income (loss):  

                                                        [Enlarge/Download Table]

                                                                                  THREE MONTHS   
                                                                                      ENDED      
                                          FISCAL YEAR ENDED DECEMBER 31,            MARCH 31,    
                                    ------------------------------------------   --------------- 
                                     1997     1998     1999     2000     2001     2001     2002  
                                    ------   ------   ------   ------   ------   ------   ------ 
                                                           (IN MILLIONS)                         
                                                                                                 
Net income (loss).................. $  202   $  (68)  $ (150)  $  145   $   71   $   69   $  (17)
Add (deduct):                                                                                    
  Income tax expense (recovery)....     51      (18)     (36)      34       30       23       (5)
  Interest expense.................     32       22       25       32       32        8        7 
  Interest and other income........    (34)     (26)     (14)     (16)     (19)      (4)      (2)
  Other expense....................     --       --       69       --       11       --       -- 
  Depreciation and amortization....    117      107      112      110      113       27       28 
                                    ------   ------   ------   ------   ------   ------   ------ 
EBITDA -- Canadian GAAP............ $  368   $   17   $    6   $  305   $  238   $  123   $   11 
  U.S. GAAP adjustments (3)........    (26)     (20)      24      (32)      20      N/A      N/A 
                                    ------   ------   ------   ------   ------   ------   ------ 
EBITDA -- U.S. GAAP (3)............ $  342   $   (3)  $   30   $  273   $  258      N/A      N/A 
                                    ======   ======   ======   ======   ======   ======   ====== 

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(5) We schedule a shutdown and inspection of each of our plants at intervals of 
three or more years to perform necessary maintenance and replacement of 
catalysts (a process commonly known as a turnaround). The amounts shown 
represent cash flows in the period.                                     

(6) Plants and equipment under development for 1997 consists of $29 million     
  related to the completion of our Chile II plant and $60 million related to
the construction of our Chile III plant. Plants and equipment under     
development for 1998 and 1999 related to the completion of our Chile III
plant. Plants and equipment under development for 2001 consists of $55  
  million related to our 63.1% interest in the Atlas methanol facility under
construction in Trinidad and $5 million related to the development of   
   potential new methanol facilities in Chile and Australia. The amounts shown
represent cash flows in the period.                                     

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MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion of our financial condition and results of    
operations should be read in conjunction with our consolidated financial        
statements and the accompanying notes included elsewhere in this prospectus.    

     We prepare our financial statements in accordance with Canadian GAAP, which
differs in certain respects from U.S. GAAP. For a discussion of the principal   
measurement differences between Canadian GAAP and U.S. GAAP as they pertain to  
us, refer to the supplemental information to our consolidated financial         
statements included elsewhere in this prospectus. The following discussion is   
based upon our financial statements prepared in accordance with Canadian GAAP.  

OVERVIEW

 Methanol is a liquid commodity chemical produced primarily from natural
gas. Roughly three quarters of all methanol is used to produce formaldehyde,    
acetic acid and other chemical derivatives for which demand is influenced by    
levels of global gross domestic product. The remainder of all methanol is used  
to produce the gasoline additive MTBE for which demand is driven by clean air   
legislation in the United States and other countries as well as levels of       
gasoline demand.                                                                

  We are the world's largest producer and marketer of methanol. We operate
methanol production facilities located in Chile, New Zealand and North America  
and source additional methanol produced by others either on a contract basis or 
on the spot market in order to meet customer needs and support our marketing    
efforts. In a joint venture with BP, we are currently building the world's      
largest methanol plant in Trinidad which we expect will commence commercial     
operation by late 2003. Our operating results are affected by the prevailing    
market price for methanol, our production volumes and related costs of          
production and distribution and, to a lesser extent, the margins we earn on the 
sale of methanol produced by others.                                            

 Methanol prices are characterized by volatility and are affected by the
methanol demand/ supply balance, which is influenced by global industry         
capacity, global industry operating rates and the strength of demand. In        
addition, the price of natural gas in North America affects the cash production 
cost of North American methanol producers. Historically, this cost has          
established the minimum expected methanol selling price in North America.       
Shutdowns of high cost capacity resulted in a tight demand/supply balance and   
higher methanol prices from mid-2000 to mid-2001 than those in the first part of
2000. Methanol prices declined significantly in the second half of 2001,        
consistent with general economic conditions, and remained low in the first part 
of 2002. We believe there have been a number of positive developments late in   
the first quarter and into the second quarter of 2002, including some early     
signs of a recovery in methanol demand. On the supply side, there have been a   
number of unplanned methanol plant outages, particularly in Asia, the Middle    
East and Africa. These recent developments have resulted in tighter market      
conditions and higher methanol prices in the second quarter of 2002, although   
such prices have not increased to second quarter of 2001 levels. Methanol       
pricing, however, will ultimately depend on industry operating rates and the    
strength of global demand.                                                      

    Our sales revenues consist primarily of revenues from the sale of methanol
that we produce. We also earn revenues from the sale of methanol that we        
purchase and commission revenue from sales of methanol from the 850,000 tonne   
per year Titan Methanol Company plant in Trinidad. This commission revenue is   
not significant to our operating results.                                       

  For the methanol that we produce, the most significant components of our
cost of sales and operating expenses are natural gas costs and distribution     
costs associated with delivering methanol to customers from our production      
facilities. Approximately 90% of our capacity currently operating is from our   
low cost facilities outside of North America where we purchase natural gas      
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under supply contracts that provide for prices which are not directly subject to
the volatile North American natural gas market. The price we pay for natural gas
for our Chilean facility varies based on changes in methanol prices when they   
are above a certain level calculated on a trailing twelve-month basis. The price
of natural gas for our New Zealand facilities is adjusted annually upward or    
downward based on a specified New Zealand inflation rate index. Approximately   
10% of our production currently operating is in North America where we purchase 
natural gas on a short term basis.                                              

   Revenues from the sale of methanol that we purchase include revenues from
the sale of methanol purchased pursuant to long or short term purchase contracts
and from the sale of methanol purchased on the spot market. Our cost of sales   
and operating expenses for methanol that we purchase consists primarily of the  
cost of the methanol to us. The margins that we earn on the sale of purchased   
methanol are relatively insignificant and generally do not vary materially with 
the market price of methanol. However, on the sale of methanol purchased on the 
spot market, we may incur losses or realize gains when the methanol price       
decreases or increases rapidly between the time of purchase and sale.           

  We believe that our results of operations are best examined by analyzing
changes in the components of our operating income, other income (expense) and   
income taxes. Separate discussions of the revenue and cost of sales line items  
would be less meaningful because of the very different margin characteristics of
our sales of purchased methanol compared to our sales of produced methanol. The 
discussion of purchased methanol and its impact on our results of operations is 
more meaningfully discussed on a net margin basis, because the cost of sales of 
purchased methanol consists principally of the cost of the methanol itself,     
which is directly related to the selling price of methanol at the time of       
purchase. The discussion of produced methanol is more meaningful if we          
separately analyze the individual elements that impact operating income. These  
elements are selling price and sales volumes, total cash cost (which is included
in cost of sales and operating expenses in the income statement) and            
depreciation and amortization. Total cash cost includes cash production and     
distribution costs (which we call delivered cash cost) and selling, general and 
administrative expenses.                                                        

Changes in our operating income from period to period are primarily   
affected by:                                                                    

- the difference in the selling price of methanol that we produce (we 
     quantify this change as the difference in the selling price of methanol
    that we produce multiplied by the sales volume of produced methanol in
the current period);                                              

- the difference in the sales volume of methanol that we produce (we  
    quantify this change as the difference in the sales volume of methanol
    that we produce multiplied by the difference between the selling price
and delivered cash cost per tonne for the prior period);          

    - the change in total cash cost (we quantify this change as the difference
in delivered cash cost per tonne multiplied by the sales volume of
 produced methanol in the current period plus the change in selling,
general and administrative expenses);                             

   - the change in the margins earned on the sale of purchased methanol; and

- the change in depreciation and amortization.                        

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OUR RESULTS OF OPERATIONS 

THREE MONTHS ENDED MARCH 31, 2002 COMPARED WITH THREE MONTHS ENDED MARCH 31,    
2001                                                                            

OPERATING INCOME                                                                

We had an operating loss of $17 million for the first quarter of 2002 
compared with operating income of $96 million for the first quarter of 2001.    
This decrease in operating income of $113 million resulted from:                

                                                                [Download Table]

                                                              ($ MILLIONS)
                                                              ------------
                                                                          
Lower realized price of produced methanol...................      (168)   
Higher sales volumes of produced methanol...................        23    
Lower total cash cost.......................................        31    
Higher margin on the sale of purchased methanol.............         2    
Higher depreciation and amortization........................        (1)   
Other, net..................................................        --    
                                                                  ----    
Decrease in operating income................................      (113)   
                                                                  ====    

LOWER REALIZED PRICE OF PRODUCED METHANOL                             

   The average realized price of $111 per tonne for produced methanol in the
first quarter of 2002 was $117 per tonne, or 51%, lower than the first quarter  
of 2001 price of $228 per tonne. The lower average realized price for produced  
methanol resulted in a $168 million decrease in operating income in comparison  
with the first quarter of 2001. Methanol prices started to increase at the end  
of the first quarter of 2002 and into April 2002 with spot prices in the United 
States in the range of $180 to $200 per tonne in the latter part of May 2002.   

HIGHER SALES VOLUMES OF PRODUCED METHANOL                             

Although our total sales volume of produced, purchased and commission 
methanol decreased by 0.09 million tonnes to 1.78 million tonnes in the first   
quarter of 2002 compared with 1.87 million tonnes in the first quarter of 2001, 
our sales volume of produced methanol over the same period increased. Our sales 
volume of produced methanol in the first quarter of 2002 was 1.43 million tonnes
compared with 1.25 million tonnes in the first quarter of 2001, representing an 
increase of 15%. The increase in sales volume of produced methanol is primarily 
a result of lower purchases of spot methanol late in 2001 and throughout the    
first quarter of 2002 compared with the prior year. Increased sales volume of   
produced methanol resulted in a $23 million increase in operating income for the
first quarter of 2002 compared with the first quarter of 2001.                  

LOWER TOTAL CASH COST                                                 

    Our total cash cost decreased by $31 million for the first quarter of 2002
compared with the first quarter of 2001. Lower natural gas costs for our North  
American facilities accounted for $20 million of this decrease. The remainder of
the decrease relates to lower operating costs associated with idled facilities, 
lower freight and other logistics costs, and lower business development and     
strategic initiative costs.                                                     

HIGHER MARGIN ON THE SALE OF PURCHASED METHANOL                       

   We earned a margin of $1 million on the sale of purchased methanol in the
first quarter of 2002 compared with a loss of $1 million in the first quarter of
2001.                                                                           

HIGHER DEPRECIATION AND AMORTIZATION                                  

  Depreciation and amortization for the first quarter ended March 31, 2002
was $28 million compared with $27 million for the first quarter ended March 31, 
2001. This increase is a result of                                              
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higher sales volume of produced methanol in the first quarter of 2002, mostly   
offset by lower depreciation and amortization for catalyst and turnarounds in   
2002 compared with 2001.                                                        

OTHER INCOME (EXPENSE)                                                          

    Interest expense relates primarily to fixed-rate interest on our unsecured
long term debt. Interest expense for the first quarter of 2002 was $7 million   
compared with $8 million for the first quarter of 2001. The decrease relates to 
capitalized interest for the Atlas methanol project in the first quarter of     
2002.                                                                           

    Interest income for the first quarter of 2002 was $2 million compared with
$4 million for the first quarter of 2001. The decrease is primarily due to lower
interest rates in 2002.                                                         

INCOME TAXES                                                                    

The effective income tax rate for the first quarter of 2002 was 20.2% 
compared with 24.9% for the first quarter of 2001, due to the mix of income and 
effective tax rates by jurisdiction.                                            

NET INCOME (LOSS)                                                               

   For the first quarter ended March 31, 2002, we incurred a net loss of $17
million compared with net income of $69 million for the first quarter ended     
March 31, 2001.                                                                 

FISCAL YEAR ENDED DECEMBER 31, 2001 COMPARED TO FISCAL YEAR ENDED DECEMBER 31,  
2000                                                                            

OPERATING INCOME                                                                

  We had operating income of $125 million for 2001 compared with operating
income of $195 million for 2000. The decrease in operating income of $70 million
resulted from:                                                                  

                                                                [Download Table]

                                                              ($ MILLIONS)
                                                              ------------
                                                                          
Higher realized price of produced methanol..................       60     
Lower sales volumes of produced methanol....................      (33)    
Higher total cash cost......................................      (76)    
Lower margin on the sale of purchased methanol..............      (14)    
Higher depreciation and amortization........................       (4)    
Other, net..................................................       (3)    
                                                                  ---     
Decrease in operating income................................      (70)    
                                                                  ===     

HIGHER REALIZED PRICE OF PRODUCED METHANOL                            

  Our average realized price increased from $160 per tonne in 2000 to $172
per tonne in 2001. This increase of $12 per tonne, or 8%, resulted in a $60     
million improvement in operating income in 2001. We entered 2001 with good      
demand/supply fundamentals and high North American natural gas prices and, as a 
consequence, prices were higher in the first half of 2001 and our average       
realized price was $213 per tonne. Prices, however, declined significantly in   
the second half of the year, we believe, due principally to lower demand caused 
by a slowing global economy and falling natural gas prices. In the second half  
of the year we realized an average price of $131 per tonne.                     

LOWER SALES VOLUMES OF PRODUCED METHANOL                              

  While we increased our market position in this declining global economic
environment, sales from our own production in 2001 were 5.4 million tonnes,     
which was approximately 7% (or 0.4 million tonnes) below the level of 5.8       
million tonnes in 2000. This decrease is a result of lower production volumes at
our facilities in 2001 combined with increased purchases of spot                

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methanol in 2001 compared with 2000. This decline resulted in a $33 million     
reduction in operating income in 2001 compared with 2000.                       

HIGHER TOTAL CASH COST                                                

  Our total cash cost increased by $76 million for the year ended December
31, 2001 compared with the year ended December 31, 2000. This increase related  
to higher natural gas costs, higher logistics and other costs associated with   
operating below capacity and higher business development and strategic          
initiative costs.                                                               

 HIGHER NATURAL GAS COSTS.  Natural gas costs were $45 million higher in
2001 than 2000. Natural gas costs were $30 million higher for our Chilean       
facility where the purchase price for natural gas is adjusted by a formula      
related to methanol prices on a twelve-month trailing average basis. Natural gas
costs were $15 million higher for our North American facilities where we        
purchase natural gas on a short term basis. Natural gas costs in New Zealand did
not change significantly.                                                       

HIGHER LOGISTICS AND OTHER COSTS ASSOCIATED WITH OPERATING BELOW      
CAPACITY.  During 2001, we operated our facilities below capacity and as a      
result incurred $14 million of additional logistics and other associated costs  
compared with 2000. Most of these additional costs were due to ocean freight    
incurred to ship methanol from our production locations to customers outside of 
such plants' natural markets. By the fourth quarter of 2001, we had increased   
our plant operating rates, and our logistics costs had returned to the levels   
experienced in 2000.                                                            

    BUSINESS DEVELOPMENT AND STRATEGIC INITIATIVES.  Expenditures for business
development and strategic initiatives reduced operating income by approximately 
$17 million for 2001 compared with 2000. At a cost of $7 million, we completed a
materials demonstration unit in New Zealand which will be used to validate      
proprietary technology for large-scale synthesis natural gas production under a 
range of operating conditions. The remaining expenditures relate primarily to   
preliminary-stage costs for exploring opportunities to expand our methanol      
production capacity in Asia Pacific and costs for examining diversification     
opportunities that we chose not to pursue.                                      

LOWER MARGIN ON THE SALE OF PURCHASED METHANOL                        

     We incurred a loss of $21 million on the sale of purchased methanol in 2001
compared with a loss of $7 million in 2000. The $14 million decrease in margin  
on the sale of purchased methanol was primarily due to losses experienced on    
spot purchases when methanol prices declined rapidly during the second half of  
2001. By the end of 2001 we had sold all of our high-cost inventory purchased on
the spot market and we entered 2002 with minimal volumes of spot purchased      
product.                                                                        

HIGHER DEPRECIATION AND AMORTIZATION                                  

     Depreciation and amortization for the year ended December 31, 2001 was $114
million compared with $110 million for the year ended December 31, 2000. The    
increase in depreciation of $4 million relates primarily to the amortization of 
marketing rights and other assets acquired in the second half of 2000.          

OTHER INCOME (EXPENSE)                                                          

    Interest expense relates primarily to fixed-rate interest on our unsecured
long term debt. Interest expense was unchanged from 2001 to 2002. During 2001,  
we capitalized $1 million of interest to plant and equipment under development. 

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     Interest and other income consists primarily of interest earned on cash and
cash equivalents. Interest income increased by $3 million from $16 million in   
2001 to $19 million in 2002 primarily due to the settlement of an income tax    
dispute in Canada.                                                              

In 2001, we took an $11 million asset restructuring charge related    
primarily to employee severance and mothball costs for the shutdown of our      
Medicine Hat Plant 3. This shutdown is for an indeterminate period and is       
expected to result in savings of annual plant fixed and capital maintenance     
costs of approximately $10 million.                                             

INCOME TAXES                                                                    

  During 2001, we recorded income tax expense of $29 million, comprised of
current income taxes of $7 million and future income taxes of $22 million. Our  
effective income tax rate for 2001 was 29% compared with 19% for 2000. The      
effective income tax rate increased primarily because of higher levels of       
expenditures incurred in regions where no tax benefits related to these         
expenditures were recorded.                                                     

   The effective income tax rate of 29% is lower than the combined statutory
rate in Canada primarily because a significant portion of our income was earned 
in foreign jurisdictions where tax rates are lower than in Canada and because of
the utilization of previously unrecognized loss carryforwards and income tax    
deductions in New Zealand. This was partially offset by losses incurred in      
Canada where no income tax benefits were recorded.                              

 We have unrecognized income tax benefits in New Zealand and Canada (see
note 13 to our consolidated financial statements included elsewhere in this     
prospectus).                                                                    

NET INCOME                                                                      

 For the year ended December 31, 2001, net income was $71 million or $82
million before an after-tax asset restructuring charge of $11 million related to
the shutdown of our Medicine Hat Plant 3 for an indeterminate period. These     
results compare with net income of $145 million for 2000.                       

LIQUIDITY AND CAPITAL RESOURCES 

THREE MONTHS ENDED MARCH 31, 2002 COMPARED WITH THREE MONTHS ENDED MARCH 31,    
2001                                                                            

CASH FLOWS FROM OPERATING ACTIVITIES                                            

 Cash flows from operating activities before changes in non-cash working
capital and the utilization of prepaid natural gas in the first quarter of 2002 
was $10 million compared with $107 million for the first quarter of 2001. The   
decrease is primarily related to lower realized methanol prices in the first    
quarter of 2002, partially offset by lower natural gas costs and increased      
margins resulting from an increase in sales of our own methanol production.     

  There were no significant changes in non-cash working capital during the
first quarters of 2002 and 2001.                                                

CASH FLOWS FROM INVESTING ACTIVITIES                                            

  Plant and equipment under development includes three projects: the Atlas
methanol facility under construction in Trinidad, the potential expansion of our
facility in Chile and potential new methanol production capacity in Australia to
serve the Asia Pacific market. During the quarter ended March 31, 2002, our cash
contribution to the Atlas methanol facility was $28 million. As of March 31,    
2002, our total cash contribution to the project was $66 million, excluding the 
$17 million payment made in the third quarter of 2001 to acquire Beacon Group   
Energy Investment Fund's interest in the Atlas project.                         

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Capital maintenance expenditures for the first quarter of 2002 were $3
million compared with $5 million for the first quarter of 2001.                 

CASH FLOWS FROM FINANCING ACTIVITIES                                            

    During the quarter ended March 31, 2002, we repurchased 3.1 million of our
common shares pursuant to a normal course issuer bid for a total cost of $19    
million. As of March 31, 2002, we had repurchased a total of 5.3 million shares 
for a total cost of $31 million under this bid.                                 

YEAR ENDED DECEMBER 31, 2001 COMPARED WITH YEAR ENDED DECEMBER 31, 2000         

CASH FLOWS FROM OPERATING ACTIVITIES                                            

 Cash flows from operating activities before changes in non-cash working
capital and the utilization of prepaid natural gas was $219 million in 2001     
compared with $297 million for 2000. Although the average realized methanol     
price in 2001 was higher than 2000, cash flows from operating activities before 
changes in non-cash working capital and the utilization of prepaid natural gas  
decreased by $78 million. This decrease relates primarily to lower operating    
income and the cash costs incurred on the shutdown of the Medicine Hat Plant 3  
for an indeterminate period.                                                    

  In 2001, we received a refund of $67 million from the Canada Customs and
Revenue Agency representing the full amount placed on deposit plus accrued      
interest relating to the successful settlement of our 1991 income tax           
reassessment.                                                                   

     The reduction in other non-cash working capital for 2001 of $89 million was
primarily due to a decrease in trade accounts receivable as a result of lower   
methanol prices and a decrease in the volume of high cost purchased product     
inventory. For 2000, the increase in other non-cash working capital of $97      
million was primarily related to an increase in inventory and trade accounts    
receivable as a result of higher methanol prices and increased business         
activity.                                                                       

CASH FLOWS FROM INVESTING ACTIVITIES                                            

  Capital maintenance expenditures for 2001 were $19 million compared with
$25 million for 2000.                                                           

In 2001, we acquired, for $17 million, Beacon Group Energy Investment 
Fund's right to participate in the 1.7 million tonne per year Atlas methanol    
facility to be constructed in Trinidad. During 2001, our 63.1% proportionate    
share of Atlas construction costs, excluding the $17 million payment to Beacon, 
was $46 million, of which we paid $38 million during the year.                  

   In 2000, we completed the acquisitions of Saturn Methanol Company and the
methanol assets of ICI Chemicals and Polymers in the United Kingdom for a       
combined cash cost of $32 million. We believe these transactions increased our  
global market share and provided us with increased flexibility in supplying the 
U.S. and European markets.                                                      

CASH FLOWS FROM FINANCING ACTIVITIES                                            

     During 2001, we repurchased 29.2 million of our common shares pursuant to a
substantial issuer bid for $175 million at $6.00 per share, which was below book
value. Also, during 2001 we commenced a normal course issuer bid to repurchase  
up to 11.5 million shares. As of December 31, 2001, we had repurchased 2.2      
million shares for a total cost of $12 million under this bid.                  

During 2001, we paid $3 million in reduction of long term liabilities 
related to the acquisition of Saturn and $3 million in reduction of long term   
liabilities related to the 1999 Fortier asset restructuring. During 2000, we    
paid $11 million in reduction of long term liabilities related to the           

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1995 acquisition of North American marketing rights and the 1999 Fortier asset  
restructuring. In addition, we repaid $7 million of long term debt assumed on   
the acquisition of Saturn.                                                      

SUMMARY OF CONTRACTUAL OBLIGATIONS, OTHER COMMERCIAL COMMITMENTS AND CAPITAL    
MAINTENANCE EXPENDITURES                                                        

The following table presents a summary of our long term debt and other
major contractual obligations as well as other major commercial commitments over
the next five years as at December 31, 2001:                                    

                                                        [Enlarge/Download Table]

                                               2002    2003     2004     2005    2006 
                                              ------  ------   ------   ------  ------
                                                      (IN MILLIONS OF DOLLARS)        
                                                                                      
Debt repayments.............................. $  150  $   --   $   --   $  250  $   --
Take-or-pay contracts(1).....................    159     142      166      161     147
Operating lease commitments(2)...............    102      89       77       76      74
Estimated capital expenditures for the Atlas                                          
   methanol facility(3)......................    115      85       --       --      --
                                              ------  ------   ------   ------  ------
                                              $  526  $  316   $  243   $  487  $  221
                                              ======  ======   ======   ======  ======

---------------                                                                 

(1) Methanex has commitments under take-or-pay contracts to purchase annual     
quantities of natural gas supplies including those related to the Atlas 
  facility and to pay for transportation capacity related to these supplies.
   Take-or-pay means that we are obliged to pay for the natural gas regardless
   of whether we take delivery of the natural gas contracted. Such commitments
are typical in the methanol industry.                                   

(2) These relate primarily to vessel charter, terminal facilities, office space 
and equipment.                                                          

(3) Capital expenditure commitments relate to our share of the construction     
   costs for the Atlas methanol facility. The total cost of the Atlas methanol
 facility, including financing costs, is expected to be approximately $400
   million. Our share of capital expenditures for this project, for the period
  from January 1, 2002 to December 31, 2003, is estimated to be $200 million
and these expenditures are expected to be funded from a planned project 
    financing, cash generated from operations and cash on hand. Our total equity
contribution to the Atlas joint venture, assuming project financing is  
   arranged as planned, is expected to be approximately $100 million, of which
$66 million had been funded at March 31, 2002.                          

Planned capital maintenance expenditures directed towards major       
maintenance, turnarounds and catalyst changes, which are not included in the    
above table, are estimated to total less than $80 million through the end of    
2004. We are currently considering two potential strategic projects in Chile and
Australia. If we proceed with these projects, the capital expenditures involved 
will be incurred within the next five years.                                    

LIQUIDITY                                                                       

   We maintain conservative financial policies that reflect the volatile and
cyclical nature of methanol pricing. We focus on maintaining our financial      
strength and flexibility through prudent financial management.                  

 As at March 31, 2002 our cash balance was $287 million. We also have an
undrawn $291 million credit facility that expires in January 2004. We believe   
the cash and undrawn credit facility, combined with our low cost production     
capacity, provide us with substantial financial capacity and flexibility.       

We believe we have the financial capacity to complete our capital     
maintenance spending program and fund our equity contribution for the           
construction of Atlas.                                                          

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FINANCIAL RISK MANAGEMENT                                                       

The dominant currency in which we conduct business is the U.S. dollar,
which is our reporting currency. A significant portion of our costs, however,   
are incurred in other currencies, principally the New Zealand dollar and the    
Canadian dollar and, to a lesser extent, the Chilean peso. We are exposed to    
increases in the value of these currencies that could have the effect of        
increasing the U.S. dollar equivalent of cost of sales and operating expenses.  
We also have some revenues in Euros and British pounds. We are exposed to risks 
of declines in the value of these currencies compared to the U.S. dollar which  
could have the effect of decreasing the U.S. dollar equivalent of revenue.      

  We have implemented a foreign exchange hedging program designed to limit
our exposure to foreign exchange volatility and to contribute towards achieving 
strategic cost structure targets. We manage our exposure to foreign currencies  
through forward exchange contracts and currency options. These instruments are  
used solely for hedging purposes, not for speculation. Hedging activity is      
reviewed regularly by the Audit, Finance and Risk Committee of our Board.       

The fair value of our forward exchange contracts and foreign currency 
options was negative $64 million at March 31, 2002. Until settled, the fair     
value of these financial instruments will fluctuate based on changes in foreign 
exchange rates. These contracts and options are not subject to rating triggers  
or margin calls and rank equally with all our unsecured and unsubordinated      
indebtedness.                                                                   

CRITICAL ACCOUNTING POLICIES

We believe the following selected accounting policies and issues are  
critical to understanding the estimates, assumptions and uncertainties that     
affect the amounts reported and disclosed in our consolidated financial         
statements and related notes. See Note 1 to our annual consolidated financial   
statements included elsewhere in this prospectus for a more comprehensive       
discussion of our significant accounting policies.                              

RECOVERABILITY OF PROPERTY, PLANT AND EQUIPMENT                                 

  Our business is capital intensive and has required, and will continue to
require, significant investments in property, plant and equipment. At March 31, 
2002, the carrying amount of our property, plant and equipment was $1,038       
million. Recoverability of property, plant and equipment is measured by         
comparing the carrying amount of an asset to the undiscounted future net cash   
flows expected to be generated from the asset over its estimated useful life. In
cases where the undiscounted expected future cash flows are less than the       
carrying amounts, a write-down is recognized equal to the difference.           

     We idled our Fortier plant in 1999 and our Medicine Hat Plant 3 in 2001 for
indeterminate periods as their operating costs were much higher than our        
facilities in New Zealand and Chile where we are endeavoring to maximize our    
production. Both Medicine Hat Plant 3 and Fortier are being maintained in a     
position to restart if conditions warrant this course of action. These two      
plants had a combined net book value of $187 million at March 31, 2002.         

    A prolonged economic downturn impacting methanol demand, or an increase in
supply, could intensify competitive pricing pressure, create an imbalance of    
industry supply and demand, or otherwise diminish volumes or profits. In        
addition, sustained high North American natural gas prices could cause North    
American methanol facilities to become uncompetitive. Such events would impact  
our estimates of future net cash flows to be generated by our production        
facilities. Consequently, it is possible that our future operating results could
be materially and adversely affected by impairment charges related to the       
recoverability of our property, plant and equipment.                            

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SITE RESTORATION                                                                

     As at March 31, 2002, we had accrued $56 million for obligations for future
removal and site restoration costs for those sites where a reasonably definitive
estimate of the costs can be made. Inherent uncertainties exist because the     
restoration activities will take place, for the most part, many years in the    
future and there may be changes in governmental and environmental regulations,  
and changes in removal technology and costs. It is difficult to estimate the    
true costs of these activities which are based on today's regulations and       
technology. Because of uncertainties related to estimating future removal and   
site restoration activities, future costs related to the currently identified   
sites could differ from the amounts estimated.                                  

FUTURE INCOME TAXES                                                             

   Future income tax assets and liabilities are determined using enacted tax
rates for the effects of net operating losses and temporary differences between 
the book and tax bases of assets and liabilities. We record a valuation         
allowance on future tax assets, when appropriate, to reflect the realization of 
expected future tax benefits. In determining the appropriate valuation          
allowance, certain judgments are made relating to the level of expected future  
taxable income and to available tax planning strategies and their impact on the 
utilization of existing loss carryforwards and other income tax deductions. In  
making this analysis, we consider historical profitability and volatility to    
assess whether we believe it to be more likely than not that the existing loss  
carryforwards and other income tax deductions will be utilized to offset future 
taxable income otherwise calculated. These judgments are routinely reviewed by  
management. At March 31, 2002, we had future income tax liabilities with a      
carrying value of $162 million. We have established a valuation allowance       
primarily for New Zealand and Canadian future income tax assets, the realization
of which we do not currently consider to be more likely than not.               

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THE METHANOL INDUSTRY 

GENERAL 

     Methanol is a liquid commodity chemical produced primarily from natural gas
and is typically used as a chemical feedstock in the manufacture of other       
products. Roughly three quarters of all methanol is used in the production of   
formaldehyde, acetic acid and a variety of other chemicals which form the basis 
of a large number of chemical derivatives. These derivatives are used in the    
manufacture of a wide range of products including building materials, foams,    
resins and plastics. The remainder of methanol demand comes from the fuel       
sector, principally as a component in the production of MTBE, which is blended  
with gasoline as a source of octane and as an oxygenate to reduce the amount of 
tailpipe emissions from motor vehicles. Methanol is also being used on a small  
scale as a direct fuel for motor vehicles and is actively being considered as a 
preferred fuel for fuel cells.                                                  

DEMAND

     We believe that global methanol consumption has grown from approximately 21
million tonnes in 1993 to approximately 30 million tonnes in 2001, representing 
a compound annual growth rate of approximately 4.8%, despite a decline in       
overall methanol demand in 2001 versus 2000 due to lower global economic        
activity in the second half of 2001. The following charts illustrate the        
breakdown of 2001 global demand by derivative type and geographic market.       

2001 DEMAND BREAKDOWN 
BY DERIVATIVE 

[PIE CHART: 
FORMALDEHYDE 32%
ACETIC ACID 10% 
OTHER 32% 
MTBE 26%] 

2001 DEMAND BREAKDOWN 
BY GEOGRAPHY

[PIE CHART: 
NORTH AMERICA 33% 
EUROPE 27%
ASIA PACIFIC 28%
OTHER 12%]

Source: Chemical Market Associates Inc.                         

CHEMICAL DERIVATIVE DEMAND                                                      

  Chemical derivatives produced from methanol include formaldehyde, acetic
acid and a variety of others.                                                   

FORMALDEHYDE:  Methanol makes up approximately 45% of formaldehyde by 
weight. The largest use for formaldehyde is as a component of urea-formaldehyde 
and phenol-formaldehyde resins, which are used as adhesives for oriented strand 
board, plywood, particleboard, medium-density fibreboard and other reconstituted
or engineered wood products. Formaldehyde is also used as a raw material for    
engineering plastics and in the manufacture of a variety of other products,     
including elastomers, paints, building products, foams, polyurethane and        
automotive products.                                                            

     ACETIC ACID:  Methanol makes up approximately 55% of acetic acid by weight.
Acetic acid is a chemical intermediate employed principally in the production of
vinyl acetate monomer, or VAM, acetic anhydride, purified terephthalic acid and 
acetate solvents, which are used in a wide variety of products including        
adhesives, paper, paints, plastics, resins, solvents, pharmaceuticals and       
textiles. We believe the acetic acid industry has also benefited from increasing
demand for water-                                                               
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based solvents produced with VAM for use in paints and adhesives due to         
environmental concerns associated with emissions of volatile organic compounds  
from other types of solvents.                                                   

   OTHERS:  As a basic chemical building block, methanol is also used in the
manufacture of methylamines, methyl methacrylate and a diverse range of other   
chemical derivatives, which in turn are ultimately used to make such products as
adhesives, coatings, plastics, textiles, paints, solvents, paint removers,      
polyester resins and fibres, explosives, herbicides, pesticides and poultry feed
additives. Other end-uses of methanol include silicone products, as a substitute
for chlorofluorocarbons in aerosol products, as a de-icer and windshield washer 
fluid for automobiles and as an antifreeze for pipeline dehydration.            

     Reflecting the diversity of its end-use products, growth in methanol demand
is generally linked to growth in the economy. Since formaldehyde, acetic acid   
and other chemical derivatives are used in the construction industry, the       
cyclicality of the construction industry, which is determined by the level of   
housing starts, refurbishments and consumer spending, is an important factor in 
determining the level of chemical derivative demand for methanol. Demand is also
affected by automobile production, durable goods production, industrial         
investment and environmental and health trends, as well as new product          
development in the panelboard and plastic packaging industries. Chemical        
derivative demand for methanol has been relatively insensitive to changes in    
methanol prices. We attribute this to the fact that there are few cost-         
effective substitutes for methanol in the production of methanol-based chemical 
derivatives and because methanol costs typically account for only a small       
portion of the cost of many of the end-use products.                            

MTBE AND FUEL DEMAND                                                            

Methanol makes up approximately 36% of MTBE by weight. MTBE is used   
primarily as a source of octane and as an oxygenate for gasoline. MTBE was      
developed as a source of octane when unleaded gasolines were introduced. Over   
the past several years environmental concerns and legislation have also         
increased demand for MTBE as an oxygenate in gasoline in order to reduce        
automobile tailpipe emissions. Worldwide methanol demand for MTBE was           
approximately 7.9 million tonnes in 2001. Over half (or approximately 4.6       
million tonnes) of methanol demand for MTBE was in the United States and 1.3    
million tonnes of this demand was for MTBE consumed in California. In the United
States, MTBE's value as an oxygenate became the most significant factor in its  
use. As discussed in more detail below, California and other states in the      
United States, as well as the U.S. federal government, have initiated actions   
that may limit, or even eliminate, the use of MTBE as a gasoline component in   
the United States.                                                              

Elsewhere, MTBE continues to be used as a source of octane, but with  
growing usage for its clean air benefits. We believe the largest potential for  
MTBE growth is outside the United States. Our belief is based on the actions    
being taken around the world to phase out lead, benzene and other aromatics from
gasoline. In December 2001, the European Union confirmed the suitability and    
continued use of MTBE as a fuel additive. Implementation of clean air standards 
is continuing in Western Europe, where the compound annual growth rate of demand
for MTBE was approximately 12.5% from 1999 to 2001, as new specifications that  
limit lead, benzene and aromatics content in gasoline in the European Union were
implemented. Demand for MTBE in Asia is also increasing as many countries work  
towards removing lead and aromatics from gasoline to improve air quality.       

   Originally, one of the most important factors in the increased demand for
MTBE as an oxygenate in the United States arose from the implementation of the  
1990 amendments to the United States Clean Air Act, or the Clean Air Act. The   
Clean Air Act requires the use of cleaner-burning oxygenated gasolines under two
programs: the winter-time oxygenated fuel (oxy-fuel) program which was          
introduced in 1992 and the year-round reformulated gasoline (RFG) program which 
was introduced in 1995. Both programs were designed to achieve a minimum        

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oxygen content in gasoline. Although ethanol (which is primarily produced from  
corn in the United States) is also one of the oxygenates approved for use under 
the Clean Air Act, MTBE quickly became the oxygenate of choice of the refining  
industry due to its cost, compatibility with the gasoline blending and          
distribution systems and its availability.                                      

 Gasoline containing MTBE, which is more easily detectable in water than
other gasoline components, has leaked into groundwater principally from         
underground gasoline storage tanks and has been discharged directly into        
drinking water reservoirs. California and other states in the United States have
reacted by initiating actions that may limit the use of MTBE as a gasoline      
component. In March 1999, the Governor of California announced a decision to ban
MTBE as a gasoline additive in California by January 1, 2003. Also in 1999, a   
panel commissioned by the U.S. Environmental Protection Agency, or EPA, issued a
report recommending, among other things, that the use of MTBE in gasoline be    
substantially reduced. The EPA report, however, also acknowledged the complexity
and difficulty of maintaining current air quality benefits without MTBE. In     
January 2001, the Oxygenated Fuels Association, which represents the major U.S. 
producers and marketers of MTBE, filed a suit against the State of California   
claiming that the State's proposed ban of MTBE violates and is pre-empted by the
requirements of the Clean Air Act. In June 2001, the EPA denied a request by    
California for a waiver of the requirement for the minimum oxygen content in    
gasoline, which effectively forces California to continue to permit the use of  
MTBE or to replace it with ethanol. As a result, in March 2002, the Governor of 
California announced a one-year delay of the ban of MTBE to January 1, 2004. In 
April 2002, the U.S. Senate passed a comprehensive energy bill that included a  
provision to ban MTBE in the United States within four years of its enactment.  
The U.S. House of Representatives has also passed an energy bill, but it does   
not contain a provision to ban MTBE. The Senate and the House must proceed to   
conference to determine whether energy legislation can be agreed and passed by  
the whole U.S. Congress. It is uncertain to what extent these and other         
developments will affect the demand for MTBE in the United States. We believe it
is likely, however, that the demand for methanol for MTBE in the United States  
will be reduced, or possibly eliminated, as a result of these actions.          

    The Governor's Order banning MTBE in California makes no mention of health
issues. Under its Proposition 65, California is required to list all substances 
known to the state to cause cancer or to be reproductive or developmental       
toxics. California studied MTBE and did not include it in this list. The U.S.   
National Institute of Environmental Health Sciences under its National          
Toxicology Program and the International Agency for Research on Cancer which was
established by the World Health Organization have also studied MTBE and had     
similar findings.                                                               

In July 1999, we gave notice to the U.S. State Department that we were
claiming damages under the provisions of the North American Free Trade          
Agreement, or NAFTA, relating to California's decision to ban MTBE. Our claims  
under the NAFTA allege that California's treatment of us is unfair and          
inequitable, that it is discriminatory in favor of the ethanol industry, and    
that it is tantamount to expropriation. A NAFTA arbitration panel has been      
established to hear the claim and heard argument in July 2001 on jurisdictional 
issues. The panel has not yet published its ruling on that issue. At present, we
are uncertain as to what the final disposition of our NAFTA claim will be.      

OTHER DEMAND                                                                    

     Over the long term, additional demand for methanol may come from the use of
methanol as a direct fuel for motor vehicles. Methanol also has potential to    
power fuel cells, an alternative means of generating electrical energy in an    
environmentally friendly manner that does not use traditional combustion.       
Currently, a small percentage of global methanol demand is for use in the       
production of TAME, another fuel additive.                                      

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SUPPLY

 While a significant amount of new methanol capacity came on-stream from
1998 to 2001, a large number of high-cost North American and European producers 
shut down plants that remain shut down. In addition, the industry has           
consistently operated significantly below stated capacity, even in periods of   
high methanol prices and margins, due primarily to shutdowns for planned and    
unplanned repairs and maintenance.                                              

     Newer methanol plants are generally constructed in remote coastal locations
with access to low cost natural gas, although this advantage is sometimes offset
by higher distribution costs due to their distance to major markets. There is   
typically a span of two and one-half to four years to plan and construct a new  
methanol plant. The only new capacity to start production in 2001 was the       
850,000 tonne per year AMPCO facility in Equatorial Guinea. A 400,000 tonne     
facility in Argentina owned by YPF/Repsol started commercial production in April
2002 and we have entered into a contract to market all export volume from this  
plant for approximately two years. We expect the next increment of capacity to  
be our 1.7 million tonne Atlas facility in Trinidad which is expected to start  
commercial production in late 2003. Announcements have been made that a 1.0     
million tonne facility is under construction in Iran.                           

    Additional methanol supply can potentially become available by re-starting
methanol plants whose production has been idled, by carrying out major          
expansions of existing plants and by debottlenecking existing plants to increase
their production capacity. Typical of most cyclical commodity chemicals,        
extended periods of relatively high methanol prices encourage construction of   
new plants and major expansion projects, leading to the possibility of an       
oversupply in the market.                                                       

METHANOL PRICES 

Methanol is an internationally traded commodity. Methanol prices have 
historically been volatile and have been sensitive to overall production        
capacity relative to demand, the price of natural gas feedstock and general     
economic conditions. In addition, the price of natural gas in North America     
impacts the cash production cost of North American methanol producers.          
Historically, this cost affects the minimum expected methanol selling price in  
North America.                                                                  

 The following chart shows methanol contract prices in the world's major
methanol markets:                                                               

[Methanol Gas Contract Prices Graph]

    Methanol prices in the United States, Europe and Asia Pacific have largely
tracked each other, though often with leads or lags. In times when prices in    
different markets diverge, product from offshore suppliers moves into the higher
priced market, bringing the prices in different markets back into alignment.    

    The majority of product sold in the United States is priced with reference
to published contract prices to which discounts may be applied. Spot market     
transactions are widely reported                                                

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in weekly industry newsletters. The Rotterdam contract price is the main price  
benchmark for Europe. This price, to which discounts may be applied, is         
negotiated quarterly between the major customers and suppliers in the region. As
with the U.S. market, spot transactions also occur. The third major market, Asia
Pacific, has contract prices which are either based on a formula primarily      
related to the U.S. and European contract prices or based on regional market    
conditions. In Asia Pacific, discounts may be applied and spot transactions also
occur.                                                                          

METHANOL PRODUCTION PROCESS 

    The methanol manufacturing process typically involves heating natural gas,
mixing it with steam and passing it over a nickel catalyst, where the mixture is
converted into carbon monoxide, carbon dioxide and hydrogen. This reformed gas  
(also known as synthesis gas) is then cooled, compressed and passed over a      
copper-zinc catalyst to produce crude methanol. Crude methanol consists of      
approximately 80% methanol and 20% water by weight. Crude methanol is then      
distilled to remove water, higher alcohols and other impurities and produce     
chemical grade methanol.                                                        

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OUR BUSINESS

OVERVIEW

We are the world's largest producer and marketer of methanol. We have 
methanol production facilities located in Chile, New Zealand and North America  
and source additional methanol produced by others throughout the world. In a    
joint venture with BP, we are currently building the world's largest methanol   
plant in Trinidad which we expect will commence commercial operation by late    
2003. We sell methanol through an extensive global marketing and distribution   
system, which has enabled us to become the largest supplier of methanol to each 
of the major international markets of North America, Asia Pacific and Europe, as
well as Latin America. For the year ended December 31, 2001, we generated       
revenues of $1.15 billion and EBITDA of $238 million. We had assets of $1.69    
billion as at December 31, 2001.                                                

OUR COMPETITIVE STRENGTHS 

We believe that our business has the following competitive strengths: 

     GLOBAL PRESENCE AND SCALE:  We believe that we are the only global producer
and supplier of methanol. Our production facilities, together with our marketing
contracts to sell methanol produced by others, allow us to provide our customers
with methanol from sources strategically located throughout the world. We       
believe that this has enabled us to secure contracts with high quality global   
customers. We believe this global presence and depth of coverage also allows us 
to develop current views of the worldwide methanol industry, enabling us to     
respond quickly to changing market trends in supply and demand. Between 1997 and
2001, our average sales represented 25% of world demand and in 2001 we had at   
least a 23% market share in each of the major world markets of North America,   
Europe and Asia Pacific, as well as Latin America.                              

 LOW COST PRODUCER:  We believe that a low cost structure is critical to
maintaining a strong competitive position. The most significant component of our
cost structure is natural gas and, accordingly, access to low cost natural gas  
is a critical success factor for our business. In the mid-1990s we began to     
reduce our operating exposure to the volatile North American natural gas market 
by shutting down higher cost plants in North America and constructing new       
facilities with long term, low cost natural gas supply contracts. We started    
production at new plants in Chile in 1996 and 1999, aggregating approximately   
2.1 million tonnes of capacity under low cost 20 year natural gas contracts,    
permanently shut down higher cost plants in Canada in 1997 and 1999 and shut    
down higher cost plants for an indeterminate period in Louisiana in 1999 and in 
Canada in 2001. Initiatives such as these have reduced our North American       
production from 49% of total production in 1994 to 8% in 2001. Distribution     
costs from our plants to major markets are also a significant part of our cost  
structure. Over the last few years we have taken a number of steps to reduce    
these costs, in part by seeking to take advantage of our large production hubs. 
For example, in early 2000, we started using the 100,000 dead weight tonne      
Millennium Explorer, the world's largest chemical tanker, to transport methanol 
from Chile to Europe and the United States, which significantly reduced our     
logistics costs on these routes. In mid-2000, we completed construction of a    
terminal in Korea that has allowed us to more efficiently and cost-effectively  
service our customer base in northeast Asia. We believe our access to low cost  
natural gas and our initiatives in reducing our distribution costs have allowed 
us to be a low cost supplier in the markets we serve.                           

     OPERATIONAL EXPERTISE:  We maintain detailed operations procedures aimed at
ensuring an efficient and safe work place. We also plan our scheduled           
maintenance to coincide with required catalyst replacements. Since 1998, we have
reduced our recordable injury frequency rate (recordable injuries per 200,000   
exposure hours) from 2.20 to 0.84 in 2001. The combination of these factors has 
led to an average plant reliability factor of 96% for the past five years.      
Reliability factor is calculated as operating days as a percentage of the number
of days in the                                                                  

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period, excluding planned downtime and downtime due to business restrictions.   
Our high reliability rate is an essential factor in keeping costs low and       
generating revenue and we believe it enhances our position as a secure, global  
provider of methanol.                                                           

OUR STRATEGY

 Our primary objective is to maintain and enhance our strong competitive
position. The key elements of our strategy to achieve this objective may be     
summarized as follows:                                                          

     STRIVING AT ALL TIMES TO FURTHER REDUCE OUR COST STRUCTURE:  We continue to
take steps to strengthen our position as a low cost global producer. In August  
2001, our Board of Directors approved the investment in, and development of, the
1.7 million tonne per year Atlas methanol plant in Trinidad, a joint venture    
between Methanex and BP. This project is underpinned by a long term natural gas 
contract and will serve as a low cost hub to supply the North American and      
Western European markets. We are also considering two other potential strategic 
projects. The first is the expansion of our Chilean facility to add             
approximately 840,000 tonnes of additional annual capacity and the consequential
extension of all our low cost Chilean natural gas supply contracts. The second  
is the construction of a 2.0 million tonne per year methanol plant in Western   
Australia, as a supply hub for the Asia Pacific region. We expect to make a     
decision on whether to proceed with these projects within the next year.        

   We are also focused on reducing our ocean shipping and other distribution
costs. We seek to use larger vessels where possible and to maximize the         
utilization of our shipping fleet. We also seek to take advantage of prevailing 
conditions in the shipping market by varying the type and length of term of our 
ocean shipping contracts. We are planning to increase the number of in-market   
terminal storage facilities, particularly in Asia, to further improve the       
efficiency and cost-effectiveness of servicing our customers. We also look for  
opportunities to enter into product exchanges to reduce duty and other          
distribution costs.                                                             

MAINTAINING OUR WORLD LEADERSHIP IN METHANOL MARKETING, LOGISTICS AND 
SALES:  We sell methanol through an extensive global marketing and distribution 
system. We believe this has enabled us to become the largest supplier of        
methanol to each of the major international markets of North America, Asia      
Pacific and Europe, as well as Latin America. We continue to pursue             
opportunities which allow us to maintain this market leadership. We have played 
a role in the consolidation of the methanol industry. In 2000, we entered into  
long term arrangements with BP and Sterling Chemicals to supply BP's methanol   
needs and exercised our option to idle Sterling's 450,000 tonne per year        
methanol plant. We also acquired ICI's methanol assets located primarily in the 
United Kingdom, including a customer base and logistics infrastructure but      
excluding the 500,000 tonne per year methanol plant which ICI closed thereafter.
Over the past five years, we have shut down, either permanently or for an       
indeterminate period, 1.5 million tonnes of our own higher-cost capacity. Other 
producers have also shut down plants totalling 1.5 million tonnes of production,
allowing us to gain new customers. We have also launched e-commerce platforms   
focused on key customer connectivity in North America and Asia Pacific and plan 
to provide on-line inventory management services, further integrating our       
distribution network with our customers.                                        

  FOCUSING ON OPERATING EXCELLENCE IN MANUFACTURING AND OTHER KEY AREAS OF
OUR BUSINESS: We believe that methanol consumers view reliability of supply as  
critical to the success of their businesses. In order to differentiate ourselves
from our competitors, we strive to be a premier operator in all aspects of our  
business. Our goal is to build new and efficient plants on time and deliver     
product to our customers reliably and cost effectively. Through our Responsible 
Care program we have achieved an excellent overall environmental and safety     
record at all of our facilities. This reduces the likelihood of unscheduled     
shutdowns and lost time accidents. Our focus on operational excellence includes 
both excellence in our manufacturing process and in the leadership of our human 
resources. By maintaining and improving our plant operating reliability         
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as a result of our focus on operational excellence, we believe we have become a 
preferred supplier of methanol globally.                                        

    INVESTING IN NEW TECHNOLOGIES AND DEVELOPING NEW MARKETS FOR METHANOL:  We
believe that it is important to exhibit manufacturing and technological         
leadership and to play a role in developing new markets for methanol. We are    
continuing our efforts to develop opportunities in natural gas-based technology 
innovation and fuel cells where methanol is a potential fuel. With Synetix,     
which conducts the catalyst activities of ICI, we constructed a materials       
demonstration unit to validate proprietary technology for large-scale synthesis 
gas production. Commercial success of this technology should provide us with a  
competitive advantage in terms of scale and economics in methanol production. We
also made an equity investment in Cellex Power Products, a developer and        
innovator of fuel cell product solutions for use in industrial power            
applications. This investment should give us an opportunity to demonstrate how  
methanol can be delivered and used in these fuel cell applications in a safe and
cost effective manner. Through the California Fuel Cell Partnership we have     
sponsored the opening of a methanol fuel service station in California and have 
been involved in the development of a methanol fuelling mechanism.              

MAINTAINING FINANCIAL DISCIPLINE:  We operate in a cyclical industry. 
Accordingly, we believe it is important to maintain financial flexibility       
throughout the methanol industry cycle and we have deliberately adopted a       
prudent approach to our liquidity. We have similarly established a disciplined  
approach to capital spending and have set minimum target return criteria for    
methanol capacity additions and other investments. We are focused on financial  
discipline and value creation.                                                  

METHANOL MARKETING

  We sell methanol to every major market through a worldwide marketing and
distribution system with marketing offices in the United States (Dallas),       
Belgium (Brussels), England (Billingham), Canada (Vancouver), New Zealand       
(Auckland), South Korea (Seoul) and Chile (Santiago). Some of our major         
customers include Ashland Chemical, Borden Chemicals and Plastics, BP, Dow      
Corning, Dragon Crown, Huntsman, Lyondell, Mitsui, Mitsubishi and Samsung.      

We have a three-pronged methanol marketing strategy:                  

- to develop and maintain a strong customer base in the major methanol
    markets of North America, Europe and Asia Pacific, as well as in Latin
    America, which are strategically located in relation to our production
facilities;                                                       

- to form direct customer relationships rather than sell to methanol  
traders; and                                                      

- to secure and maintain long term sales contracts with our customers.

    We believe our geographically dispersed, multiple production sites enhance
our ability to secure major chemical and petrochemical producers as customers,  
for whom reliability of supply and quality of service are important. Our network
of marketing offices, together with our storage and terminal facilities and     
worldwide shipping arrangements, also allow us to provide larger customers with 
multinational sourcing of product and other customized, service-enhancing       
arrangements.                                                                   

 We augment our marketing operations by identifying surplus product from
other producers and buying in the U.S. and European methanol spot markets. This 
enables us to service a portion of the contract and spot requirements of our    
customers when the economics are favorable. We continually evaluate our ability 
to cost-effectively serve markets from our facilities and we maintain internal  
flexibility to quickly decide whether to produce or buy methanol. Methanol that 
is purchased outside of contract arrangements also provides us the opportunity  
to build our sales base prior to bringing on our own new capacity.              
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  Currently, approximately 90% of our sales are covered by contracts which
are typically one year or longer and which contain pricing formulas that are    
generally determined on the basis of posted contract or other market prices at  
the time of shipment. Sales contracts generally specify a minimum and maximum   
volume and may include a "meet or release" clause that enables the customer to  
temporarily suspend the contract if another supplier of methanol offers a more  
favorable price. None of our customers accounted for more than 10% of total     
revenue in 2001.                                                                

     We engage in additional merchant methanol marketing through the purchase of
methanol produced by others. We have a long term contract to market the entire  
output of the 850,000 tonne per year Titan facility in Trinidad and a contract  
to market, until April 2004, up to approximately 300,000 tonnes annually        
produced from the Repsol/YPF plant in Argentina. We source additional methanol  
through the U.S. and European methanol spot markets. Our annual sales volume of 
methanol sourced from third parties for resale in 2001 was 1,999,647 tonnes     
compared to 955,949 tonnes in 2000.                                             

FACILITIES

 The following table sets forth a description of our existing production
facilities, together with associated capacity and operating data:               

                                                        [Enlarge/Download Table]

                                                           OPERATING       2001        2000   
                                                          CAPACITY(1)   PRODUCTION  PRODUCTION
                                             YEAR BUILT  (TONNES/YEAR)   (TONNES)    (TONNES) 
                                             ----------  -------------  ----------  ----------
                                                                                              
Punta Arenas, Chile                                                                           
  Chile I...................................    1988         925,000      878,437     872,601 
  Chile II..................................    1996       1,010,000      840,910   1,022,120 
  Chile III.................................    1999       1,065,000    1,064,303   1,016,950 
Waitara Valley, New Zealand.................    1983         530,000      404,901     525,031 
Motunui, New Zealand                                                                          
  Distillation II...........................    1990         500,000      362,381     489,929 
  Distillation III..........................    1994         700,000      685,212     702,144 
  Distillation IV...........................    1995         700,000      679,835     693,561 
Kitimat, Canada(2)..........................    1982         500,000      249,530     242,714 
Medicine Hat, Canada Plant 3(3).............    1981         470,000      195,788     442,055 
Fortier, United States(4)...................    1994         570,000           --          -- 
                                                           ---------    ---------   --------- 
Total.......................................               6,970,000    5,361,297   6,007,105 

---------------                                                                 

(1) Actual operating rates can vary.                                            

(2) Kitimat was temporarily shut down from July 1, 2000 until June 30, 2001.    

(3) Medicine Hat Plant 3 was shut down in June 2001 for an indeterminate period.

(4) Fortier was shut down in March 1999 for an indeterminate period.            

  We attempt to optimize the operation of our production facilities around
the world by balancing our production with customer demand throughout our global
supply chain and by taking advantage of this operating flexibility to switch    
production to the lowest cost plants to lower our overall delivered cost of     
methanol. We idled our Fortier plant in 1999 and our Medicine Hat Plant 3 in    
2001 for indeterminate periods as their operating costs were much higher than   
our facilities in New Zealand and Chile where we are attempting to maximize our 
production. Both Medicine Hat Plant 3 and Fortier are being maintained in a     
position to restart if conditions warrant this course of action. Those two      
facilities had a combined net book value of $187 million at March 31, 2002.     

Scheduled plant shutdowns are necessary to change catalysts or perform
maintenance activities which cannot otherwise be completed with the plant       
on-line (a process commonly known as a turnaround). Turnarounds typically take  
between three and four weeks and occur                                          

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approximately every three or more years. Catalysts generally need to be changed 
every four years, although there is flexibility to extend catalyst life if      
market conditions warrant, at the expense of some production efficiency or      
capacity. Careful planning and scheduling is required to ensure that other      
maintenance and repairs can be carried out during turnarounds. In addition, both
scheduled and unscheduled shutdowns may also occur between turnarounds. We      
prepare a comprehensive eight-year turnaround plan which is updated annually for
all of our production facilities.                                               

In 2001, we entered into two transactions aimed at increasing our     
production capacity and presence in Trinidad, which we believe is important     
because of its low cost natural gas supplies, and proximity to the North        
American and European markets. First, we acquired, for $17 million, Beacon Group
Energy Investment Fund's right to participate in the Atlas methanol facility.   
The agreement also provides us with an option, which expires on December 31,    
2003, to acquire Beacon's 75% interest in the 850,000 tonne per year Titan      
methanol plant located adjacent to the Atlas project. Second, we approved       
construction of the Atlas facility. Construction of the Atlas facility is       
currently underway and we expect it will commence commercial production by late 
2003. In a joint venture with BP, we own 63.1% and BP owns 36.9% of the Atlas   
project. The total capital cost of Atlas, including financing costs, is expected
to be $400 million. Our share of this cost is estimated to be approximately $250
million, which we expect to fund from a planned project financing, cash         
generated from operations and cash on hand. Our total equity contribution to the
Atlas joint venture, assuming project financing is arranged as planned, is      
expected to be approximately $100 million, of which $66 million had been funded 
at March 31, 2002.                                                              

   We are also considering two other potential strategic projects. The first
is the expansion of our Chilean facility to add approximately 840,000 tonnes of 
additional annual capacity. The second is the construction of a 2.0 million     
tonne per year methanol facility in Western Australia. We expect to make a      
decision on whether to proceed with these projects within the next year.        

DISTRIBUTION AND LOGISTICS

   We supply our customers from our facilities located around the world. Our
plants in Chile supply customers primarily in Europe and the United States and  
the New Zealand plants primarily supply customers in Asia Pacific. The Kitimat  
plant supplies primarily the U.S. West Coast and Western Canada. The Medicine   
Hat facility, when operating, supplies customers in Canada and the U.S. Midwest,
and the Fortier plant, when operating, supplies customers in the southeastern   
United States and along the Mississippi River. We are currently supplying       
customers historically supplied from the Fortier and Medicine Hat facilities    
from other sources.                                                             

 Methanol from our plants in Chile, New Zealand and Kitimat is pumped by
pipeline to adjacent deep-water ports for shipping. We manage a fleet of        
time-chartered vessels to ship methanol. In order to retain optimal flexibility 
in the management of the fleet, we have entered into short term and long term   
time-charters covering vessels with a range of capacities. We also ship methanol
under contracts of affreightment and through spot arrangements. We use larger   
vessels as key elements in our supply chain to move product from our production 
facilities to key storage facilities located in major ports. We also use smaller
vessels capable of entering into restricted ports to deliver methanol directly  
to customers. We also lease or own storage and terminal facilities in the United
States, Canada, Europe and Asia. In North America and Europe, we use barge, rail
and, to a lesser extent, truck transport in our delivery system.                

NATURAL GAS SUPPLY

    Natural gas is the principal feedstock for methanol. Part of our long term
strategy has been to secure continuity of natural gas supply at favorable       
prices.                                                                         

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CHILE                                                                           

Natural gas for the Chile I plant is supplied by Empresa Nacional del 
Petroleo de Chile, or ENAP, under a contract which expires in 2009. ENAP is a   
Chilean state-owned energy company which has monopoly rights over all oil and   
natural gas in Chile. Natural gas for the Chile II plant is supplied 70% by     
sellers in Argentina, including YPF/Repsol, and 30% by ENAP under contracts that
expire in 2016 and 2017, respectively. Natural gas for the Chile III plant is   
supplied 86% by sellers in Argentina and 14% by ENAP under contracts which      
expire in 2019.                                                                 

     The contractual purchase price of natural gas for all three plants is based
on a minimum U.S. dollar price adjusted by a formula related to prevailing      
methanol prices. Under the terms of the contracts, the sellers are obligated to 
supply, and we are obligated to take or pay for, a specified annual quantity of 
natural gas. Take-or-pay means that we are obliged to pay for the natural gas   
regardless of whether we take delivery of the natural gas contracted for. We    
also have an option to purchase up to an additional specified amount each year. 
Under the Chile II and III natural gas contracts, any contract quantities of    
natural gas paid for but not taken in any calendar quarter may be taken in any  
subsequent quarter within a year without further payment once the contract      
quantity for that quarter has been taken. For Chile I, natural gas paid for but 
not taken must be taken by March 2012.                                          

We are evaluating expanding the capacity of our Chilean facility by   
approximately 840,000 tonnes per year. Natural gas supply for the expansion     
would be contracted along with an extension of all our natural gas contracts    
that serve the Chilean plants.                                                  

NEW ZEALAND                                                                     

Natural gas for the Waitara Valley and Motunui facilities is sourced  
primarily from the Maui and Kapuni fields, which currently account for          
approximately 75% and 10%, respectively, of New Zealand's total annual          
production of natural gas. Approximately 85% of the natural gas contracted for  
our New Zealand facilities comes from the Maui field. The Maui field is an off- 
shore field located off the west coast of New Zealand. When operating at        
capacity our New Zealand facilities consume approximately 90 petajoules of      
natural gas per year, constituting approximately 40% of all natural gas consumed
in New Zealand in a year.                                                       

We have the right to purchase natural gas from the Maui field under   
take-or-pay contracts with the New Zealand Government which terminate in 2003   
and 2005. Any contract quantities of natural gas paid for but not taken in any  
year generally may be taken in any subsequent year until 2006 without further   
payment once the contract quantity for that year has been taken. We also have a 
contract with Contact Energy to purchase natural gas from the Maui field. Under 
this contract, any quantities of natural gas paid for but not taken in any year 
generally may be taken in any subsequent year until 2007 without further payment
once the contract quantity for that year has been taken. The price for natural  
gas under these contracts is based upon a fixed New Zealand dollar price which  
was established in 1973, adjusted annually upward or downward by a factor which 
is based on, but in all cases is less than, a specified New Zealand inflation   
rate index for the previous year.                                               

     Our contractual supplier of natural gas from the Kapuni field purchases the
natural gas from the owners of Kapuni. We are obligated to purchase, and the    
supplier is obligated to supply, a specified annual quantity of natural gas     
through 2003. We also have a contract with this supplier for the purchase of    
additional Kapuni natural gas until July 2004. The price for natural gas under  
these contracts is essentially equivalent to the purchase price under the Maui  
natural gas contracts, plus certain additional inflation adjusted fixed amounts.

     In addition to Maui and Kapuni natural gas, we purchase natural gas sourced
from the McKee and Mangahewa fields. The price for natural gas under these      
contracts is consistent with maintaining the New Zealand operations cost base.  

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    Our contractual entitlements to take natural gas from the Maui field under
the contracts with the New Zealand Government and Contact Energy, or the Maui   
Contracts, are subject to reduction if the Maui natural gas field reserves are  
redetermined under the head contract between the owners of the Maui field and   
the New Zealand Government to a level below a specified quantity (essentially   
representing the aggregate of quantities currently contracted with all parties).
In November 2001, the owners of the Maui field, through their agent Maui        
Development, announced a preliminary estimate of economically recoverable       
natural gas reserves that stated the Maui reserves may be materially below the  
aggregate of contracted supply quantities. In December 2001, Maui Development   
initiated, in accordance with the Maui Contracts, a formal redetermination of   
the Maui reserves. In 2002, as part of the redetermination process, Maui        
Development provided its estimate of the Maui reserves and provided us with a   
data package, the purpose of which is to enable us to carry out an independent  
reserves assessment. The redetermination process then provides the parties to   
the various contracts (including us) with an opportunity to agree to a new      
contract reserves estimate. In the absence of agreement on reserves, the matter 
will be referred to an independent expert for resolution. A final conclusion on 
reserves is expected prior to the end of 2002. In conjunction with this process,
we understand that the operator of the Maui field is planning to assess the     
opportunity for recovery of additional quantities of natural gas from within the
Maui field.                                                                     

Some of our subsidiaries in New Zealand that are parties to the Maui  
Contracts have initiated proceedings seeking damages from the New Zealand       
government and the Maui mining companies on the basis that those subsidiaries   
have not been provided with timely and adequate disclosure of information and   
data in respect to the Maui reserves further to the current redetermination     
process. These proceedings have been adjourned pending the filing by the New    
Zealand government of its own claim against the Maui mining companies. The New  
Zealand Crown has agreed to issue proceedings against the Maui mining companies 
to seek a declaration as to the extent of data and information required to be   
provided by the Maui mining companies further to the current redetermination    
process. The preliminary hearing of these proceedings will occur later in June. 
If that hearing determines that adequate data and information has not been      
provided then we would expect those proceedings to move to a full trial in early
August to which our subsidiaries would be parties.                              

   Our current contracted natural gas entitlements are sufficient to operate
the New Zealand plants at capacity for the equivalent of approximately two and  
one-half years. If the redetermination process determines that the Maui reserves
are less than the aggregate of current contracted quantities with all parties,  
then our contractual entitlements under the Maui Contracts are likely to be     
reduced. If the redetermination process determines a level of Maui reserves at  
or close to the Maui Development estimate, we would immediately lose any further
natural gas entitlements under two of our Maui Contracts and would have         
substantially reduced natural gas entitlements until 2005 under the other Maui  
Contracts. If that were to occur, we would be required to purchase new natural  
gas quantities from elsewhere to allow our plants to operate at capacity. We are
reviewing a number of options for replacing any quantities that may be lost to  
us. For instance, the Pohokura natural gas condensate field, located adjacent to
our New Zealand facilities and currently estimated to contain 1000 petajoules of
natural gas, is scheduled to come onstream in 2005 and we continue to seek to   
secure natural gas from this field. We cannot assure you that we will be able to
secure replacement natural gas from this field or other fields on commercially  
acceptable terms, if at all.                                                    

CANADA                                                                          

    We source natural gas for our Kitimat plant from the natural gas fields of
northeastern British Columbia, where substantial volumes of natural gas are     
available and are expected to continue to be available for the foreseeable      
future. Natural gas for the Kitimat plant is purchased directly                 

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from producers or other marketers under firm, short term index-priced contracts.
British Columbia natural gas prices are set in a competitive market and are     
subject to fluctuation.                                                         

     Natural gas purchased for the Kitimat plant is transported through pipeline
transmission systems operated by Westcoast Energy and its affiliate, Pacific    
Northern Gas, or PNG. The contract to transport approximately 75% of the natural
gas to the Kitimat plant expires on October 31, 2002. In March 2002 we entered  
into an agreement with PNG to replace that contract and two smaller contracts   
that expire in 2003 and 2009 with a new take-or-pay contract. The new PNG       
contract, which will come into effect on November 1, 2002 and terminate in 2009,
establishes fixed transportation rates for the entire term and will             
substantially reduce our natural gas transportation costs for the Kitimat plant.
The new PNG contract remains subject to the approval of the British Columbia    
Utilities Commission. We have an obligation to supply hydrogen until 2011 to    
Pacific Ammonia for a portion of its ammonia facility that is located on the    
Kitimat plant site. Historically, this hydrogen has been supplied to Pacific    
Ammonia as a by-product of the methanol production process. Hydrogen is recycled
within the production process at our other plants for use as fuel.              

 In June 2001 we shut down the Medicine Hat Plant 3 for an indeterminate
period. Natural gas for the Medicine Hat Plant 3 is sourced from Alberta fields 
which offer substantial volumes of available natural gas and may be purchased   
from various suppliers under contracts with various pricing mechanisms.         
Quantities may also be purchased on the daily spot market to balance production.
Alberta natural gas prices are set in a competitive market and are subject to   
fluctuation.                                                                    

UNITED STATES                                                                   

The Fortier plant, currently idle, is located near the Henry Hub,     
Louisiana, an area characterized by an abundant supply of natural gas and       
available natural gas pipeline transportation. Natural gas transportation is    
available from a number of pipeline operators at competitive rates. Natural gas 
is also readily available from a combination of marketers and producers under   
contracts with various pricing mechanisms. As Henry Hub is a national price     
reference point, the market is competitive and natural gas prices are subject to
fluctuations.                                                                   

FOREIGN OPERATIONS AND GOVERNMENT REGULATION

GENERAL                                                                         

     Our operations in Canada, the United States, Chile, New Zealand, Europe and
elsewhere are affected by political developments and by federal, provincial,    
state and other local laws and regulations.                                     

     Trade in methanol is subject to import duties in a number of jurisdictions.
We currently incur an import duty of 3.5% on Chilean methanol that we sell into 
the European Community and an 8% duty on New Zealand and Chilean methanol that  
we sell into the United States. We do not currently pay any duties in any other 
major market to which we export methanol.                                       

CHILE                                                                           

    Our subsidiary, Methanex Chile, through a branch registered in Chile, owns
the Chile I, Chile II and Chile III plants. Chilean foreign investment          
regulations provide certain additional benefits and guarantees to companies     
which enter into a foreign investment contract, or a DL600 Contract, with the   
State of Chile. Methanex Chile has entered into three substantially identical DL
600 Contracts, one for each of the three existing plants.                       

Under the DL 600 Contracts, Methanex Chile is authorized to remit from
Chile in U.S. dollars or any other freely convertible currency, all or part of  
its profits and, subject to certain conditions,                                 

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its equity. Methanex Chile also has the right under the DL 600 Contracts to pay 
income taxes at an overall fixed rate of 42% for twenty years. Alternatively,   
Methanex Chile can make an irrevocable election to pay income tax at the        
generally applicable rates. The Chile branch of Methanex Chile has not made this
election.                                                                       

The DL 600 Contracts provide that they cannot be amended or terminated
without the consent of Methanex Chile.                                          

NEW ZEALAND                                                                     

    We are not currently subject to any exchange control or other governmental
restrictions relating to the movement of money into or out of New Zealand.      

   The New Zealand Government imposes a levy on the producers of natural gas
in New Zealand in respect of gas produced as a result of a discovery prior to   
January 1, 1986. This levy applies to almost all natural gas from the Maui field
and all natural gas from the Kapuni field at the fixed rate of NZ$0.45          
(approximately $0.22 based on the noon buying rate set by the Federal Reserve   
Bank of New York on June 13, 2002) per gigajoule. In line with current natural  
gas industry practice, our New Zealand natural gas supply contracts specify that
we must reimburse the suppliers for the levy they pay. Accordingly, if the      
government were to change the amount of the levy, this would have a direct      
effect on our natural gas costs.                                                

    The New Zealand Government also has the power to impose constraints on the
manufacturing, export and distribution of petroleum products (including         
methanol). These powers give the government the ability to deal with a petroleum
supply shortage or strategic need in a manner similar to how many governments   
dealt with the oil shortages of the 1970s and early 1980s.                      

  The New Zealand Government also enacted legislation in 1986 to safeguard
claims by Maori tribes (the indigenous people of New Zealand) against lands     
previously owned by state-owned enterprises and subsequently privatized. The    
land on which certain parts of the infrastructure for the Waitara Valley and    
Motunui plants are located (for example, a tank farm and various pipelines and  
pipeline valve and mixing stations) are subject to this legislation. There is a 
possibility that the tribunal which deals with Maori land claims could recommend
the return of such land to Maori ownership. The New Zealand Government would be 
required to comply with such a recommendation, subject to payment of            
compensation to the affected owner. We believe that, subject to receiving       
adequate compensation, such a forced divestment would not likely have a material
adverse effect on our operations or financial condition. The land upon which the
Waitara Valley and Motunui plants are located and the surrounding buffer zones  
of farmland owned by us are not subject to such forced divestment procedures.   

ENVIRONMENTAL MATTERS 

  Canada, the United States, Chile and New Zealand all have laws governing
the environment and the sustainable management of natural resources as well as  
the handling, storage, transportation and disposal of hazardous or waste        
materials. We are also subject to laws governing the import, export, use,       
discharge, storage, disposal and transportation of toxic substances. The        
substances we use and produce are subject to regulation under various health,   
safety and environmental laws. Non-compliance with these laws and regulations   
may give rise to work orders, fines, injunctions, civil liability and criminal  
sanctions.                                                                      

  As a result of periodic external and internal audits, we believe that we
are currently in compliance in all material respects with all existing          
environmental, health and safety laws and regulations to which our operations   
are subject. Laws and regulations protecting the environment have become more   
stringent in recent years and may, in certain circumstances, impose absolute    
liability rendering a person liable for environmental damage without regard to  
negligence or fault                                                             
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on the part of such person. Such laws and regulations may expose us to liability
for the conduct of, or conditions caused by, others, or for our own acts which  
complied with applicable laws at the time such acts were performed. To date,    
environmental laws and regulations have not had a material adverse effect on us.

    As a member of the Canadian Chemical Producers' Association in Canada, the
American Chemistry Council in the United States, ASIQUIM (Asociacion de         
Industriales Quimicos de Chile) in Chile and the Chemical Industry Council in   
New Zealand, we are committed to the ethics and principles of Responsible Care. 
Accordingly, we have established policies, systems and procedures to promote and
encourage the responsible development, introduction, manufacture,               
transportation, storage, handling, distribution, use and ultimate disposal of   
chemicals and chemical products so as to minimize adverse effects on human      
health and well-being, the environment and the communities in which we operate. 

COMPETITION 

     The methanol industry is highly competitive. Competition is based primarily
on price and reliability of supply. The relative cost and availability of       
natural gas and the efficiency of production facilities are also important      
competitive factors. Because of our ability to service our customers globally,  
the reliability and cost-effectiveness of our distribution system and the       
enhanced service we provide our customers, we believe we are well positioned to 
compete in each of the major international methanol markets. Some of our major  
competitors are Celanese, Methanol Holdings Trinidad, QAFAC, Sabic and Statoil. 

EMPLOYEES 

As of March 31, 2002, we had 808 employees. Other than 36 of the      
maintenance workers at our New Zealand facilities, none of our employees is     
unionized. We believe that relations with our employees are good.               

Of the 51 maintenance workers at our New Zealand facilities, 36 are   
unionized and have been since the mid-1980s. The current collective agreement   
with the union expires in August 2003. At the expiry of the previous collective 
agreement in September 2001, the union staged a three-day strike. Operations at 
the facility were not materially affected as a result of the strike.            

LEGAL PROCEEDINGS 

    From time to time, we are involved in legal proceedings relating to claims
arising out of our operations in the ordinary course of business. We do not     
believe there are any material proceedings pending or threatened against us or  
any of our properties.                                                          

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CORPORATE INFORMATION 

We were incorporated under the laws of Alberta on March 11, 1968 and  
continued under the Canada Business Corporations Act on March 5, 1992. Our head 
office is located at 1800 Waterfront Centre, 200 Burrard Street, Vancouver,     
British Columbia V6C 3M1 (telephone: (604) 661-2600).                           

The following chart includes our principal operating subsidiaries and 
partnerships as of March 31, 2002 and, for each subsidiary or partnership, its  
place of organization and our percentage of voting interests beneficially owned 
or over which control or direction is exercised. The chart also shows our       
principal production facilities and their locations.                            

[Corporate Organization Chart:                                                  
Methanex Corporation (Canada)                                                   
North America and Caribbean:                                                    
Atlas Methanol Plant (Trinidad)(1) 63.1%                                        
Titan Methanol Plant (Trinidad) 10%                                   
Medicine Hat Methanol Plant (Canada) 100%                             
Methanex Fortier Inc. (Delaware) 100%                                 
-- Fortier Methanol Plant (United States)                   
Methanex Methanol Company (Texas Partnership) 100%                    
Waterfront Shipping Company Limited (Barbados) 100%                   
Asia-Pacific:                                                                   
Methanex New Zealand Limited (New Zealand) 100%                       
Methanex Waitara Valley Limited (New Zealand) 100%          
- Waitara Valley Methanol Plant                   
Methanex Motunui Limited (New Zealand) 100%                 
-- Motunui Methanol Plants                        
Latin America:                                                                  
Methanex Chile Limited (Barbados) 100%                                
-- Chile Methanol Plants (Chile)                            
Europe:                                                                         
Methanex Europe NV (Belgium) 100%                                     
Methanex (UK) Limited (England) 100%]                                 
---------------                                                                 

(1) The Atlas plant is currently under construction.                            

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

    The following sets forth the names of our directors and executive officers
and their respective positions.                                                 

                                                        [Enlarge/Download Table]

NAME                                          POSITION                                             
----                                          --------                                             
                                                                                                   
Pierre Choquette............................. President, Chief Executive Officer and Director      
Robert B. Findlay(2)(3)...................... Director                                             
Brian D. Gregson(1)(3)....................... Director                                             
R.J. (Jack) Lawrence(1)(2)................... Director                                             
Jeffrey M. Lipton(2)(4)...................... Chairman of the Board and Director                   
David Morton(2)(4)........................... Director                                             
Christopher D. Pappas(3)..................... Director                                             
A. Terence Poole(1).......................... Director                                             
Graham D. Sweeney(1)(3)...................... Director                                             
Anne L. Wexler(2)(4)......................... Director                                             
Bruce Aitken................................. Senior Vice President, Asia Pacific                  
Ronald W. Britton............................ Senior Vice President, Emerging Energy Applications  
Allan S. Cole................................ Senior Vice President, Finance and                   
                                              Chief Financial Officer                              
Gerry F. Duffy............................... Senior Vice President, Global Marketing and Logistics
W. James Emmerton............................ Senior Vice President, Corporate Development and     
                                              General Counsel                                      
John K. Gordon............................... Senior Vice President, Corporate Resources           
Rodolfo L. Krause............................ Senior Vice President, Latin America and             
                                              Global Manufacturing                                 

---------------                                                                 

(1) Member of the Audit, Finance and Risk Committee.                            

(2) Member of the Human Resources and Corporate Governance Committee.           

(3) Member of the Responsible Care Committee.                                   

(4) Member of the Public Policy Committee.                                      

 PIERRE CHOQUETTE, PRESIDENT, CHIEF EXECUTIVE OFFICER AND DIRECTOR.  Mr.
Choquette has been our President and Chief Executive Officer since 1994. From   
1988 to 1994, he held senior positions with NOVA Corporation. Prior thereto, he 
had been with Polysar Ltd. since 1966 with international roles in Canada, the   
United States, Belgium and Switzerland until his appointment as President of    
Polysar Polymers in 1988, heading up a $1.5 billion global business. Mr.        
Choquette graduated from Laval University with a BA and a Master's Degree in    
Chemical Engineering. Mr. Choquette serves on the Board of Directors of Telus   
Corporation, Stelco Inc., BC Gas Inc. and Gennum Corporation, and is a member of
the Canadian Counsel of Chief Executives.                                       

   ROBERT B. FINDLAY, DIRECTOR.  Mr. Findlay has been a director since 1994.
He is a corporate director. From 1990 to 1997, he was President and Chief       
Executive Officer of MacMillan Bloedel Limited, a Canadian forest products      
company.                                                                        

     BRIAN D. GREGSON, DIRECTOR.  Mr. Gregson has been a director since 1994. He
is a corporate director. From 1991 to 1995, he was Chairman of Barbican         
Properties Inc., a Canadian real estate development company. Prior thereto, he  
was Senior Executive Vice President of the Royal Bank of Canada.                

 R.J. (JACK) LAWRENCE, DIRECTOR.  Mr. Lawrence has been a director since
1995. He has been Chairman of Lawrence & Company Inc., a Canadian private       
advisory firm, since 1995. Prior thereto, he was Vice-Chairman of Nesbitt Burns 
Inc.                                                                            

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     JEFFREY M. LIPTON, DIRECTOR.  Mr. Lipton has been a director since 1994 and
he was appointed Chairman of the Board in 1998. He has been the President and   
Chief Executive Officer of NOVA Chemicals Corporation, a commodity chemical     
company with operating headquarters in the United States, since 1998. Prior     
thereto, he was President of NOVA.                                              

     DAVID MORTON, DIRECTOR.  Mr. Morton has been a director since 1995. He is a
corporate director. From 1993 to 1995, he was Chairman of Alcan Aluminium       
Limited, a Canadian aluminium producer. Prior thereto, he was Chairman and Chief
Executive Officer of Alcan.                                                     

CHRISTOPHER D. PAPPAS, DIRECTOR.  Mr. Pappas has been a director since
March 2002. He has been the Senior Vice President and President, Styrenics of   
NOVA since July 2000. From March 2000 to July 2000, he was President and Chief  
Executive Officer of Paint and Coatings.com. From 1998 to March 2000, he was    
Commercial Vice President, Ethylene Elastomers and Vice-President Americas of   
DuPont Dow Elastomers Inc. Prior thereto, he was Vice-President Ethylene        
Elastomers, DuPont Dow Elastomers Inc.                                          

   A. TERENCE POOLE, DIRECTOR.  Mr. Poole has been a director since 1994. He
has been the Executive Vice President, Corporate Strategy and Development of    
NOVA since 2000. Prior thereto, he held the positions of Executive Vice         
President, Finance and Strategy of NOVA and Senior Vice President and Chief     
Financial Officer of NOVA.                                                      

   GRAHAM D. SWEENEY, DIRECTOR.  Mr. Sweeney has been a director since 1994.
He is a corporate director. Prior to 1994, he was President and Chief Executive 
Officer of Dow Chemical Canada Inc.                                             

   ANNE L. WEXLER, DIRECTOR.  Ms. Wexler has been a director since 2001. She
has been Chairman of the Executive Committee of Wexler & Walker Public Policy   
Associates (formerly The Wexler Group) since 2000. From 1981 to 2000, Ms. Wexler
was Chairman and Chief Executive Officer of The Wexler Group.                   

     BRUCE AITKEN, SENIOR VICE PRESIDENT, ASIA PACIFIC.  Mr. Aitken has been our
Senior Vice President, Asia Pacific since 1997. Mr. Aitken spent two years in   
Chile as an Executive Director of Cape Horn Methanol and three years in         
Vancouver as our Vice President, Corporate Development. He returned to New      
Zealand in 1995 as Director of Marketing for Asia Pacific. Prior to that, he was
with Fletcher Challenge Methanol. Mr. Aitken graduated from Auckland University 
with a BComm. He spent five years with Coopers & Lybrand before joining Fletcher
Challenge Ltd. in 1979.                                                         

RONALD W. BRITTON, SENIOR VICE PRESIDENT, EMERGING ENERGY             
APPLICATIONS.  Mr. Britton has been our Senior Vice President, Emerging Energy  
Applications since 1999. From 1998 to 1999, he was our Vice President, North    
America and Global Technology. From 1995 to 1998, he was our Vice President,    
North America. Prior thereto, he spent 15 years with Polysar Ltd. in Sarnia,    
Ontario and five years with Bayer AG, where he held a variety of management     
positions in their synthetic rubber business. Mr. Britton graduated from the    
University of British Columbia with a Ph.D. in Organic Chemistry.               

ALLAN S. COLE, SENIOR VICE PRESIDENT, FINANCE AND CHIEF FINANCIAL     
OFFICER.  Mr. Cole has been our Senior Vice President, Finance and Chief        
Financial Officer since 1997. Prior to joining us, Mr. Cole was the Senior Vice 
President and Chief Financial Officer of St. Mary's Cement Corporation.         
Previously, he spent more than 15 years at Union Carbide Canada Limited in a    
number of senior operating, marketing and corporate positions including that of 
Chief Financial Officer. Mr. Cole has a BA in economics and an MBA from McMaster
University.                                                                     

     GERRY F. DUFFY, SENIOR VICE PRESIDENT, GLOBAL MARKETING AND LOGISTICS.  Mr.
Duffy has been our Senior Vice President, Global Marketing and Logistics since  
2000. From 1999 to 2000, he was our Vice President, Global Marketing. From 1998 
to 1999, he was our Marketing Director, Asia Pacific in Auckland, New Zealand.  
From 1997 to 1998, he was our Manager, Supply Chain.                            

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He is also responsible for leading our e-commerce initiatives. Prior to joining 
us, he was Division Vice President for Industrial Chemicals of Canadian         
Occidental Petroleum Ltd. Mr. Duffy has worked for over 25 years on the         
commercial side of the North American chemical industry, including a number of  
management positions at Union Carbide, Monsanto and Exxon Chemical. Mr. Duffy   
has a B.E. (Chemical Engineering) from University College, Dublin and an MBA    
from York University.                                                           

     W. JAMES EMMERTON, SENIOR VICE PRESIDENT, CORPORATE DEVELOPMENT AND GENERAL
COUNSEL. Mr. Emmerton has been our Senior Vice President, Corporate Development 
and General Counsel since 2000. From 1997 to 2000, he was our Senior Vice       
President, General Counsel and Corporate Secretary. From 1995 to 1997, he was a 
partner of Just Solutions Mediation and Arbitration. From 1990 to 1995, he was  
Vice President and General Counsel of John Labatt Limited. Mr. Emmerton obtained
his BA (Honours) at the University of Guelph and his LLB at the University of   
Western Ontario. He was called to the Bar in Ontario in 1975.                   

     JOHN K. GORDON, SENIOR VICE PRESIDENT, CORPORATE RESOURCES.  Mr. Gordon has
been our Senior Vice President, Corporate Resources since 1998. From 1996 to    
1998, he was our Vice President, Human Resources and Corporate Affairs. Prior to
joining us, the majority of his experience was gained in a variety of           
industries, with multinational companies such as Suncor Inc., Reed Ltd., Lac    
Minerals Ltd. and Bramalea Inc. Mr. Gordon graduated from the University of     
Nevada with a BSc degree in Business Administration and an MBA. He has over 25  
years of human resource and business management experience.                     

RODOLFO L. KRAUSE, SENIOR VICE PRESIDENT, LATIN AMERICA AND GLOBAL    
MANUFACTURING. Mr. Krause has been our Senior Vice President, Latin America and 
Global Manufacturing since 1998. From 1993 to 1998, he was our Vice President,  
Latin America. From 1987 to 1993, he was Vice President, Operations, Methanex   
Chile (formerly Cape Horn Methanol Ltd.). In 1974, Mr. Krause joined Dow        
Chemical Company. He was appointed General Manager of Dow's San Lorenzo         
Industrial Complex in Argentina in 1984 and became General Manager of their     
Guarajua Industrial Complex in Brazil in 1987. Mr. Krause graduated from the    
University of Concepcion as a Chemical Engineer.                                

PRINCIPAL SHAREHOLDERS

   The following table sets out information with respect to the ownership of
our common shares, as of March 31, 2002, for each person who, to our knowledge, 
beneficially owns or exercises control or direction over 5% or more of our      
outstanding common shares.                                                      

                                                        [Enlarge/Download Table]

NAME                                                NUMBER OF SHARES  PERCENTAGE OF ISSUED SHARES
----                                                ----------------  ---------------------------
                                                                                                 
NOVA Chemicals Corporation.........................    46,946,876                  37%           

    As at March 31, 2002, our directors and executive officers owned, directly
or indirectly, or exercised control or direction over, less than 1% of our      
outstanding common shares.                                                      

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DESCRIPTION OF CERTAIN INDEBTEDNESS 

EXISTING NOTES AND CONSENT SOLICITATION 

In 1995, we issued under the Indenture $150 million of 7.40% Notes due
August 15, 2002 and $250 million of 7.75% Notes due August 15, 2005. These      
existing notes pay interest semi-annually on February 15 and August 15 of each  
year and rank equally in right of payment with all other senior indebtedness,   
including the Notes offered by this prospectus. We intend to repay in full our  
7.40% Notes upon maturity of such notes with a portion of the net proceeds from 
the sale of the Notes offered by this prospectus.                               

     We are soliciting consents from the holders of our existing 7.75% Notes due
August 15, 2005 to amend the Indenture which, if given, would amend the existing
limitation on restricted payments covenant applicable to the 7.75% Notes. Under 
the existing restricted payments covenant, we cannot make restricted payments   
(such as declaring or paying a dividend or making any distribution on our common
shares or repurchasing or redeeming any of our common shares) unless, among     
other things, after giving effect to the restricted payment, our Consolidated   
Net Worth (as defined in the Indenture) is greater than $850 million. The       
proposed amendment to the limitation on restricted payments covenant applicable 
to the 7.75% Notes would allow us to declare and pay, to the extent not         
otherwise permitted by the existing limitation, up to $30 million of cash       
dividends and distributions in respect of our capital stock in any 12 month     
period. If the consent solicitation is successful, the covenants applicable to  
the 7.75% Notes will be substantially the same as those that will be applicable 
to the Notes offered by this prospectus, except that the 7.75% Notes will       
contain a limitation on restricted payments and will not be subject to a change 
of control covenant. The closing of the sale of the Notes and the completion of 
the consent solicitation are not conditional upon each other.                   

BANK INDEBTEDNESS 

We have an unsecured credit facility. The credit facility, which is   
currently undrawn, provides for up to $291 million in revolving loans and       
letters of credit, ranks equally in right of payment with all of our other      
unsubordinated and unsecured indebtedness, including the Notes offered by this  
prospectus, and expires in January 2004. Prior to expiration, funds available   
under the credit facility may be borrowed, repaid and reborrowed without premium
or penalty. Borrowings under the facility bear interest at a floating rate,     
which can be either a base rate or, at our option, a LIBOR rate, plus an        
applicable margin in either case. Under the credit facility, we are required to 
pay a commitment fee on the difference between the amounts actually borrowed and
the committed amounts. The credit facility requires us to comply with a debt to 
capitalization ratio and a current ratio. We are currently in compliance with   
both ratios. The credit facility contains customary affirmative and negative    
covenants, representations, warranties and events of default, including but not 
limited to payment defaults, breaches of representations and warranties,        
covenant defaults, cross defaults and certain events of bankruptcy and          
insolvency.                                                                     

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DESCRIPTION OF THE NOTES

    The Notes will be issued under an indenture, dated as of July 20, 1995, as
the same will be supplemented in connection with this offering, between us and  
The Bank of New York (formerly United States Trust Company of New York), as     
Trustee (the "Indenture"). The statements under this caption relating to the    
Notes and the Indenture are summaries and do not purport to be complete, and are
subject to, and are qualified in their entirety by reference to, all the        
provisions of the Indenture, including the definitions of certain terms therein.
The Indenture is by its terms subject to and governed by the U.S. Trust         
Indenture Act of 1939, as amended. Where reference is made to particular        
provisions of the Indenture or to defined terms not otherwise defined herein,   
such provisions or defined terms are incorporated herein by reference.          

In this description, "we", "us", "our" and similar terms, as well as  
references to "Methanex", refer only to Methanex Corporation and its successors 
and not to any of its subsidiaries.                                             

GENERAL 

The Notes will be our general unsecured obligations and will mature on
August 15, 2012. The Notes will be initially issued in a total principal amount 
of $200 million. We may issue additional notes of the same series under the     
Indenture from time to time after this offering, without the consent of the     
holders of the Notes. The Notes and any additional notes of this series         
subsequently issued under the Indenture will be treated as a single class for   
all purposes under the Indenture, including, without limitation, waivers,       
amendments, redemptions and offers to purchase.                                 

   The Notes will bear interest at the rate per annum of 8.75% from June 19,
2002, or from the most recent date to which interest has been paid or provided  
for, payable semi-annually to holders of record at the close of business on the 
February 1 or August 1 immediately preceding the interest payment date on       
February 15 and August 15 of each year, commencing February 15, 2003. The Notes 
will provide for us to pay interest on overdue principal and, to the extent     
lawful, on overdue installments of interest at the above rate per annum, plus   
1%. Interest on the Notes will be computed on the basis of a 360-day year       
comprised of twelve - 30 day months. The yearly rate of interest that is        
equivalent to the rate payable under the Notes is the rate payable multiplied by
the actual number of days in the year and divided by 360 and is disclosed herein
solely for the purpose of providing the disclosure required by the Interest Act 
(Canada).                                                                       

Principal of, and premium, if any, and interest on, the Notes will be 
payable, and the Notes may be presented for registration of transfer and        
exchange, at the office or agency maintained by us for that purpose in the      
Borough of Manhattan, the City of New York, provided, however, that at our      
option, payment of interest may be made by check mailed to the address of the   
person entitled thereto at such address as shall appear in the register of      
Notes, and at the option of the registered holder of the Notes, by wire transfer
to an account designated by the registered holder. The Trustee will initially   
act as registrar.                                                               

     The Notes will not be redeemable by us prior to maturity, other than in the
event of certain changes affecting Canadian withholding taxes, as described     
under "-- Redemption for Changes in Canadian Withholding Taxes".                

There will be no mandatory sinking fund payments for the Notes.       

The Notes will rank equally in right of payment with all other of our 
unsubordinated and unsecured indebtedness. The Notes, however, will be          
structurally subordinated to the liabilities of our subsidiaries. See "Risk     
factors -- Risks Related to the Notes and Our Structure".                       

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ADDITIONAL AMOUNTS FOR CANADIAN WITHHOLDING TAXES 

 All payments made by us under or with respect to the Notes must be made
free and clear of and without withholding or deduction for or on account of any 
present or future tax, duty, levy, impost, assessment or other governmental     
charge imposed or levied by or on behalf of the Government of Canada or of any  
province or territory thereof or by any authority or agency therein or thereof  
having power to tax (hereinafter "Taxes"), unless we are required to withhold or
deduct Taxes by law or by the interpretation or administration thereof. If we   
are so required to withhold or deduct any amount for or on account of Taxes from
any payment made under or with respect to the Notes, we will pay such additional
amounts ("Additional Amounts") as may be necessary so that the net amount       
received by each holder of the Notes (including Additional Amounts) after such  
withholding or deduction will not be less than the amount the holder of the     
Notes would have received if such Taxes had not been withheld or deducted;      
provided, however, that no Additional Amounts will be payable with respect to a 
payment made to a holder of the Notes (an "Excluded Holder") (1) with which we  
do not deal at arm's length (within the meaning of the Income Tax Act (Canada)) 
at the time of making such payment or (2) which is subject to such Taxes by     
reason of its being connected with Canada or any province or territory thereof  
otherwise than by the mere holding of Notes or the receipt of payments          
thereunder. We will also make such withholding or deduction and remit the full  
amount deducted or withheld to the relevant authority in accordance with        
applicable law.                                                                 

    We will furnish to holders of the Notes, within 30 days after the date the
payment of any Taxes is due pursuant to applicable law, certified copies of tax 
receipts evidencing such payment by us. We will indemnify and hold harmless each
holder of Notes (other than an Excluded Holder) and upon written request        
reimburse such holder of Notes for the amount of (1) any Taxes so levied or     
imposed and paid by such holder as a result of payments made under or with      
respect to the Notes, (2) any liability(including penalties, interest and       
expenses) arising therefrom or with respect thereto, and (3) any Taxes imposed  
with respect to any reimbursement under (1) or (2), but excluding any such Taxes
on such holder's net income.                                                    

At least 30 days prior to each date on which any payment under or with
respect to the Notes is due and payable, if we are obligated to pay Additional  
Amounts with respect to such payment, we will deliver to the Trustee an         
Officers' Certificate stating the fact that such Additional Amounts will be     
payable, the amount so payable and will set forth other information necessary to
enable the Trustee to pay such Additional Amounts to holders of the Notes on the
payment date. Whenever in the Indenture or in this Description of Notes there is
mentioned, in any context, the payment of principal, and premium (if any),      
redemption price, interest or any other amount payable under or with respect to 
any Note, such mention shall be deemed to include mention of the payment of     
Additional Amounts to the extent that, in the context, Additional Amounts are,  
were or would be payable in respect thereof.                                    

REDEMPTION FOR CHANGES IN CANADIAN WITHHOLDING TAXES

   The Notes may be redeemed, at our option, at any time in whole but not in
part, on not less than 30 nor more than 60 days' notice, at 100% of the         
principal amount thereof, plus accrued and unpaid interest (if any) to the date 
of redemption (subject to the right of holders of record on the relevant record 
date to receive interest due on the relevant interest payment date), in the     
event we have become or would become obligated to pay, on the next date on which
any amount would be payable with respect to the Notes, any Additional Amounts as
a result of a change in or an amendment to the laws (including any regulations  
promulgated thereunder) of Canada (or any political subdivision or taxing       
authority thereof or therein), or any change in or amendment to any official    
position regarding the application or interpretation of such laws or            
regulations, which change or amendment is announced or becomes effective on or  
after the date of this prospectus.                                              

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CERTAIN COVENANTS 

Set forth below are certain covenants contained in the Indenture:     

CHANGE OF CONTROL                                                               

 Upon the occurrence of a Change of Control Triggering Event, we will be
required to make an offer (a "Change of Control Offer") to repurchase all or any
part (equal to $1,000 or an integral multiple thereof) of each Holder's Notes. A
"Change of Control Triggering Event" will occur only if a Change of Control and 
a Rating Decline both occur. In the Change of Control Offer, we will offer to   
purchase Notes for a purchase price in cash equal to 101% of the aggregate      
principal amount of the Notes repurchased plus accrued and unpaid interest, if  
any, on the Notes repurchased, to the date of purchase; provided, however, that 
interest payable on or prior to the date of purchase will be payable to the     
Holders of the Notes repurchased registered as such on the regular record date  
for such interest.                                                              

Within 30 days following a Change of Control Triggering Event, we are 
required to mail a notice to each Holder of Notes describing the transaction or 
transactions that constitute the Change of Control Triggering Event and offering
to repurchase Notes on the Change of Control Payment Date specified in the      
notice, which date shall be between 30 and 60 days of the mailing of the notice,
pursuant to the procedures required by the Indenture and described in such      
notice. We will comply with the requirements of Section 14(e) of and Rule 14e-1 
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") and  
any other securities laws and regulations thereunder to the extent those laws   
and regulations are applicable in connection with the repurchase of the Notes as
a result of a Change of Control Triggering Event. To the extent that the        
provisions of any securities laws or regulations conflict with the Change of    
Control provisions of the Indenture, we will comply with the applicable         
securities laws and regulations and will not be deemed to have breached our     
obligations under the Change of Control provisions of the Indenture by virtue of
such conflict.                                                                  

On the Change of Control Payment Date, we will be required to, to the 
extent lawful, (1) accept for payment all Notes or portions thereof properly    
tendered pursuant to the Change of Control Offer, (2) deposit with the paying   
agent an amount equal to the purchase price in respect of all Notes or portions 
thereof so tendered, and (3) deliver or cause to be delivered to the Trustee the
Notes so accepted, together with an Officers' Certificate stating the aggregate 
principal amount of Notes or portions thereof being purchased by us.            

The paying agent will be required to promptly mail to each Holder who 
properly tendered Notes, the purchase price for such Notes and the Trustee will 
be required to promptly authenticate and mail (or cause to be transferred by    
book entry) to each such Holder a new Note equal in principal amount to any     
unpurchased portion of the Notes surrendered, if any; provided that each new    
Note will be in a principal amount of US$1,000 or an integral multiple thereof. 

    The provisions described above that require us to make a Change of Control
Offer following a Change of Control Triggering Event will be applicable whether 
or not any other provisions of the Indenture are applicable. Except as described
above with respect to a Change of Control Triggering Event, the Indenture does  
not contain provisions that permit the Holders of the Notes to require that we  
repurchase or redeem the Notes in the event of a takeover, recapitalization or  
similar transaction.                                                            

    We will not be required to make a Change of Control Offer upon a Change of
Control Triggering Event if a third party makes the Change of Control Offer in  
the manner, at the times and otherwise in compliance with, the requirements set 
forth in the Indenture applicable to a Change of Control Offer made by us, and  
purchases all Notes properly tendered and not withdrawn under the Change of     
Control Offer.                                                                  

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The definition of Change of Control includes a phrase relating to the 
direct or indirect sale, lease, transfer, conveyance or other disposition of    
"all or substantially all" of the properties or assets of us and our            
Subsidiaries taken as a whole. Although there is a limited body of case law     
interpreting the phrase "substantially all," there is no precise established    
definition of the phrase under applicable law. Accordingly, the ability of a    
holder of Notes to require us to repurchase the Notes as a result of a sale,    
lease, transfer, conveyance or other disposition of less than all of the assets 
of us and our Subsidiaries taken as a whole to another Person or group may be   
uncertain.                                                                      

LIMITATION ON LIENS                                                             

   We shall not, and shall not permit any Restricted Subsidiary to, Incur or
to permit to exist any Lien of any nature whatsoever (other than Permitted      
Liens) on any of our or its property or assets now owned or hereafter acquired  
by us or it (including any Capital Stock or evidence of Indebtedness and        
including any of our Capital Stock or Indebtedness held by us or any Subsidiary)
securing any Indebtedness, without contemporaneously therewith effectively      
securing the Notes equally and ratably with (or prior to) such Indebtedness for 
so long as such Indebtedness is so secured, unless, after giving effect to such 
Lien, the aggregate amount of all Indebtedness secured by such Liens (other than
Permitted Liens) on our property or assets or that of our Restricted            
Subsidiaries, plus all of our Attributable Indebtedness and that of our         
Restricted Subsidiaries with respect to Sale/Leaseback Transactions permitted as
described below under "-- Limitation on Sale/Leaseback Transactions", does not  
exceed 10% of Consolidated Net Worth.                                           

LIMITATION ON SALE/LEASEBACK TRANSACTIONS                                       

     We shall not, and shall not permit any Restricted Subsidiary to, enter into
a Sale/Leaseback Transaction, unless, after giving effect thereto, the aggregate
amount of all Attributable Indebtedness with respect to all such Sale/Leaseback 
Transactions, plus all Indebtedness secured by Liens to which the covenant      
described above under "-- Limitations on Liens" is applicable, does not exceed  
10% of Consolidated Net Worth. However, the provisions described in this        
"Limitation on Sale/Leaseback Transactions" shall not apply to, and there shall 
be excluded from Attributable Indebtedness in any computation described in this 
covenant and in the covenant described above under "-- Limitation on Liens",    
Attributable Indebtedness with respect to a Sale/Leaseback Transaction if: (1)  
the lease in such Sale/Leaseback Transaction is for a period, including renewal 
rights, of three years or less; (2) we or a Restricted Subsidiary, within one   
year (or, in the event the net proceeds of the sale of the property leased      
pursuant to such Sale/Leaseback Transaction exceeds $75 million, within two     
years) after such Sale/Leaseback Transaction, apply an amount not less than the 
greater of the net proceeds of the sale of the property leased pursuant to such 
Sale/Leaseback Transaction or the fair market value of such property (as        
determined in good faith by the Board of Directors) to either the retirement of 
our or a Restricted Subsidiary's Funded Indebtedness or the purchase by us or a 
Restricted Subsidiary of other property having a fair market value (as          
determined in good faith by the Board of Directors) at least equal to the fair  
market value of the property so leased in such Sale/Leaseback Transaction; or   
(3) such Sale/Leaseback Transaction is entered into between us and a Restricted 
Subsidiary or between Restricted Subsidiaries.                                  

ADDITIONAL GUARANTEES                                                           

 We shall not permit any Restricted Subsidiary to Incur any Indebtedness
unless, at the time of such Incurrence such Restricted Subsidiary has Guaranteed
all our obligations with respect to the Notes pursuant to the terms of the      
Indenture, such Guarantee to be in the form provided for in the Indenture. The  
foregoing shall not apply to: (1) any Indebtedness Incurred by a Restricted     
Subsidiary to finance its working capital requirements; provided, however, that 
the aggregate                                                                   

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amount of such Indebtedness Incurred by all Restricted Subsidiaries and         
outstanding at any time shall not exceed $25 million; (2) any Indebtedness      
secured by (a) Permitted Liens or (b) Liens to which the exception in the       
covenant described above under "-- Limitation on Liens" is applicable; provided,
however, that the aggregate amount of all such Indebtedness and all our         
Indebtedness secured by such Liens (other than Permitted Liens), plus all of our
and our Restricted Subsidiaries' Attributable Indebtedness with respect to      
Sale/Leaseback Transactions permitted as described above under "-- Limitation on
Sale/Leaseback Transactions", does not exceed 10% of Consolidated Net Worth; (3)
any Attributable Indebtedness (a) with respect to a Sale/Leaseback Transaction  
which is permitted under the covenant described above under "-- Limitation on   
Sale/ Leaseback Transactions" or (b) to which the provisions described above    
under "-- Limitation on Sale/Leaseback Transactions" are not applicable; and (4)
any Indebtedness owed to and held by us or another Restricted Subsidiary;       
provided, however, that any subsequent transfer of any such Indebtedness or any 
subsequent transfer of any Capital Stock of such Restricted Subsidiary, or any  
other event, that results in such Restricted Subsidiary ceasing to be a         
Restricted Subsidiary shall be deemed to constitute the Incurrence of such      
Indebtedness at such time. Except if we have exercised either of the defeasance 
options described under "-- Defeasance" below, no Guarantor shall be released   
from its Guarantee provided pursuant to this covenant or clause (1) in the      
second paragraph of "-- Successor Company and Guarantors" below unless (1) such 
Guarantor ceases to be a Restricted Subsidiary or (2) such Guarantor has been   
discharged from all its obligations with respect to all Indebtedness Incurred by
such Guarantor (other than such Guarantee and Indebtedness described in clause  
(4) in the immediately preceding sentence) and such Guarantor has not had any   
Indebtedness (other than such Guarantee and Indebtedness described in clause (4)
in the immediately preceding sentence) outstanding for a period of 91 days.     

LIMITATIONS WITH RESPECT TO UNRESTRICTED SUBSIDIARIES                           

(a) We shall not, and shall not permit any Restricted Subsidiary to,  
directly or indirectly, enter into or conduct any transaction (including, the   
purchase, sale, lease or exchange of any property or the rendering of any       
service) with any Unrestricted Subsidiary (an "Unrestricted Subsidiary          
Transaction") on terms (1) that are less favorable in sum to us or such         
Restricted Subsidiary, as the case may be, than those that could be obtained at 
the time of such transaction in arm's-length dealings with a person other than  
an Unrestricted Subsidiary or (2) that, in the event such Unrestricted          
Subsidiary Transaction involves an aggregate amount in excess of $25 million,   
are not in writing and have not been approved by a majority of the members of   
the Board of Directors. The foregoing shall not prohibit any Investment by us or
any Restricted Subsidiary in any Unrestricted Subsidiary.                       

(b) We shall not permit any Unrestricted Subsidiary to Incur any      
Indebtedness other than Non-Recourse Indebtedness; provided, however, that in   
the event any such Indebtedness ceases for any reason to constitute Non-Recourse
Indebtedness, such Subsidiary shall be deemed to have Incurred such Indebtedness
at such time.                                                                   

(c) We shall not, and shall not permit any Restricted Subsidiary to,  
directly or indirectly, transfer to any Unrestricted Subsidiary any property or 
assets owned by us or any Restricted Subsidiary on the date of the Indenture (1)
on terms that are less favorable in sum to us or such Restricted Subsidiary, as 
the case may be, than those that could be obtained at the time of such transfer 
in arm's-length dealings with a person other than an Unrestricted Subsidiary or 
(2) unless the aggregate price for such property or assets under such transfer, 
plus the aggregate prices for any other such property or assets under any other 
such transfers completed during the twelve-month period immediately preceding   
such transfer, does not exceed $25 million.                                     

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SUCCESSOR COMPANY AND GUARANTORS

     We may not amalgamate or consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, all or       
substantially all our assets to, any person, unless: (1) the resulting,         
surviving or transferee person (if not us) is organized and existing under the  
federal laws of Canada or the laws of any province thereof or the laws of the   
United States of America, any State thereof or the District of Columbia and such
person expressly assumes by a supplemental indenture, executed and delivered to 
the Trustee, in form satisfactory to the Trustee, all of our obligations under  
the Indenture and the Notes; (2) immediately after giving effect to such        
transaction, no Default shall have occurred and be continuing; and (3) we       
deliver to the Trustee an Officers' Certificate and an Opinion of Counsel (who  
may rely on such Officers' Certificate as to matters of fact), each stating that
such amalgamation, consolidation, merger, conveyance, transfer or lease and such
supplemental indenture (if any) comply with the Indenture. The resulting,       
surviving or transferee person will be the successor company under the Indenture
and the Notes.                                                                  

We will not permit any Restricted Subsidiary that is a Guarantor to   
amalgamate or consolidate with or merge with or into, or convey, transfer or    
lease, in one transaction or a series of transactions, all or substantially all 
its assets to, any person unless: (1) the resulting, surviving or transferee    
person (if not such Guarantor) is organized and existing under the laws of the  
jurisdiction under which such Guarantor or its parent corporation was organized 
or under the federal laws of Canada or the laws of any province thereof or the  
laws of the United States of America, or any State thereof or the District of   
Columbia and such person expressly assumes by a supplemental indenture, executed
and delivered to the Trustee, in form satisfactory to the Trustee, all the      
obligations of such Guarantor under its Guarantee unless such resulting,        
surviving or transferee person has been released from such Guarantee in         
accordance with the terms of the Indenture; (2) immediately after giving effect 
to such transaction, no Default shall have occurred and be continuing; and (3)  
we deliver to the Trustee an Officers' Certificate and an Opinion of Counsel    
(who may rely on such Officers' Certificate as to matters of fact), each stating
that such amalgamation, consolidation, merger, conveyance, transfer or lease and
such supplemental indenture (if any) comply with the Indenture.                 

DEFAULTS

   An Event of Default with respect to the Notes is defined in the Indenture
as (1) a default by us in the payment of interest on the Notes (including any   
Additional Amount) when due and payable, continued for 30 days, (2) a default by
us in the payment of principal with respect to the Notes when due and payable at
Stated Maturity, upon redemption, upon declaration or otherwise, (3) the failure
by us or a Guarantor to comply with the obligations described under "-- Certain 
Covenants -- Change of Control" or "-- Successor Company and Guarantors" above, 
(4) the failure by us or any Restricted Subsidiary for 60 days after notice to  
comply with any of the obligations described under "-- Certain Covenants" above,
(5) the failure by us or any Restricted Subsidiary for 60 days after notice to  
comply with the agreements contained in the Indenture or the Notes (other than a
failure described in (1), (2), (3) or (4) above or a failure to comply with any 
of our or its obligations under the covenants or agreements that are            
specifically for the benefit of one or more series of debt securities issued    
pursuant to the Indenture other than the Notes), (6) Indebtedness of us or any  
Restricted Subsidiary is not paid within any applicable grace period and is     
accelerated by the holders thereof, or is accelerated by the holders thereof    
because of a default, and the total amount of such Indebtedness unpaid, or due  
and payable, and accelerated exceeds $10 million (the "cross acceleration       
provision"), (7) certain specified events of bankruptcy, insolvency or          
reorganization of us or a Significant Subsidiary (the "bankruptcy default       
provision"), or (8) any Guarantee of the Notes by any Guarantor at any time     
ceases to be in full force and effect for any reason (other than as a result of 
a release of such Guarantee in accordance with the terms of the Indenture) (the 
"guarantee                                                                      
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default provision"). A default under clause (4) or (5) will not constitute an   
Event of Default until the Trustee or the holders of at least 25% in principal  
amount of the outstanding Notes notify us of the default and we do not cure such
default within the time specified after receipt of such notice.                 

     If an Event of Default (other than a bankruptcy default with respect to us)
occurs and is continuing with respect to the Notes, the Trustee by notice to us,
or the holders of at least 25% in principal amount of the Notes then outstanding
by notice to us and the Trustee, may declare the principal of and accrued but   
unpaid interest on all the Notes to be due and payable. Upon such a declaration,
such principal and interest shall be due and payable immediately. If a          
bankruptcy default with respect to us occurs and is not cured within the time   
period permitted, the principal of and interest on all the debt securities      
issued pursuant to the Indenture, including the Notes, will ipso facto become   
and be immediately due and payable without any declaration or other act on the  
part of the Trustee or any holders of debt securities issued pursuant to the    
Indenture. Under certain circumstances, the holders of a majority in principal  
amount of the Notes may rescind any such acceleration with respect to the Notes 
and its consequences.                                                           

  Subject to the provisions of the Indenture relating to the duties of the
Trustee, in case an Event of Default occurs and is continuing, the Trustee will 
be under no obligation to exercise any of the rights or powers under the        
Indenture at the request or direction of any of the holders of the Notes then   
outstanding unless such holders have offered to the Trustee reasonable indemnity
or security against any loss, liability or expense. Except to enforce the right 
to receive payment of principal, premium (if any) or interest when due, no      
holder of Notes may pursue any remedy with respect to the Indenture or the Notes
unless (1) such holder has previously given the Trustee notice that an Event of 
Default is continuing, (2) holders of at least 25% in principal amount of the   
outstanding Notes have requested the Trustee to pursue the remedy, (3) such     
holders have offered the Trustee reasonable security or indemnity against any   
loss, liability or expense, (4) the Trustee has not complied with such request  
within 60 days after the receipt thereof and the offer of security or indemnity,
and (5) the holders of a majority in principal amount of the Notes have not     
given the Trustee a direction inconsistent with such request within such 60-day 
period. Subject to certain restrictions, the holders of a majority in principal 
amount of the outstanding Notes will be given the right to direct the time,     
method and place of conducting any proceeding for any remedy available to the   
Trustee with respect to the Notes or of exercising any trust or power conferred 
on the Trustee with respect to the Notes. The Trustee, however, may refuse to   
follow any direction that conflicts with law or the Indenture or that the       
Trustee determines is unduly prejudicial to the rights of any other holder of   
the Notes or that would involve the Trustee in personal liability.              

   Under the Indenture, if a Default occurs with respect to the Notes and is
continuing and is known to the Trustee, the Trustee must mail to each holder of 
the Notes notice of the Default within 90 days after it occurs. Except in the   
case of a Default in the payment of principal of, premium (if any) or interest  
on the Notes, the Trustee may withhold notice if and so long as a committee of  
its trust officers determines in good faith that withholding notice is in the   
interest of the holders of Notes. In addition, we are required to deliver to the
Trustee, within 120 days after the end of each fiscal year, a certificate       
indicating whether the signers thereof know of any Default that occurred during 
the previous year. We are also required to deliver to the Trustee, within 30    
days after we learn of the existence thereof, written notice of any event which 
would constitute certain Defaults, their status and what action we are taking or
propose to take in respect thereof.                                             

BOOK-ENTRY, DELIVERY AND FORM 

    The Notes will be represented by one or more fully registered global notes
without coupons (the "Global Notes") and will be deposited upon issuance with   
the Trustee as custodian for The                                                

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Depository Trust Company ("DTC"), in New York, New York, and registered in the  
name of DTC or its nominee. Except as set forth below, the Global Notes may be  
transferred in whole and not in part only to DTC or another nominee of DTC.     

    So long as DTC or its nominee is the registered owner thereof, DTC or such
nominee, as the case may be, will be considered the sole owner or holder of the 
Notes represented by the Global Notes for all purposes under the Indenture.     
Except as provided below, owners of beneficial interests in the Global Notes    
will not be entitled to have the Notes represented by the Global Notes          
registered in their names, will not receive or be entitled to receive physical  
delivery of the Notes in definitive form and will not be considered the owners  
or holders thereof under the Indenture.                                         

The following is based on information furnished by DTC:               

     DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a 
member of the Federal Reserve System, a "clearing corporation" within the       
meaning of the Uniform Commercial Code, and a "clearing agency" registered      
pursuant to the provisions of Section 17A of the Exchange Act. DTC holds        
securities that its participants ("Participants") deposit with DTC. DTC also    
facilitates the settlement among Participants of securities transactions, such  
as transfers and pledges, in deposited securities through electronic            
computerized book-entry changed in Participants' accounts, thereby eliminating  
the need for physical movement of securities certificates. Direct Participants  
("Direct Participants") include securities brokers and dealers, banks, trust    
companies, clearing corporations and certain other organizations. DTC is owned  
by a number of its Direct Participants and by the New York Stock Exchange, Inc.,
and the National Association of Securities Dealers, Inc. Access to DTC's system 
is also available to others such as securities brokers and dealers, banks and   
trust companies that clear through or maintain a custodial relationship with a  
Direct Participant, either directly or indirectly ("Indirect Participant"). The 
rules applicable to DTC and its Participants are on file with the Commission.   

     Purchases of the Notes under DTC's system must be made by or through Direct
Participants, which will receive a credit for such Notes on DTC's records. The  
ownership interest of each actual purchaser of each Note represented by a Global
Note ("Beneficial Owner") is in turn to be recorded on the Direct and Indirect  
Participants' records. Beneficial Owners will not receive written confirmation  
from DTC of their purchase, but Beneficial Owners are expected to receive       
written confirmations providing details of the transaction, as well as periodic 
statements of their holdings, from the Direct or Indirect Participants through  
which such Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Global Notes representing the Notes are to be accomplished by  
entries made on the books of Participants acting on behalf of Beneficial Owners.
Beneficial Owners of the Global Notes representing the Notes will not receive   
the Notes in definitive form representing their ownership interests therein,    
except in the event that use of the book-entry system for the Notes is          
discontinued or upon the occurrence of certain other events described herein.   

     To facilitate subsequent transfers, all Global Notes representing the Notes
which are deposited with DTC are registered in the name of DTC's nominee, Cede &
Co. The deposit of Global Notes with DTC and their registration in the name of  
Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the
actual Beneficial Owners of the Global Notes representing the Notes; DTC's      
records reflect only the identity of the Direct Participants to whose accounts  
such Notes are credited, which may or may not be the Beneficial Owners. The     
Direct and Indirect Participants will remain responsible for keeping account of 
their holdings on behalf of their customers.                                    

Conveyance of notices and other communications by DTC to Direct       
Participants, by Direct Participants or Indirect Participants, and by Direct    
Participants and Indirect Participants to                                       

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Beneficial Owners will be governed by arrangements among them, subject to any   
statutory or regulatory requirements as may be in effect from time to time.     

    Neither DTC nor Cede & Co. will consent or vote with respect to the Global
Notes representing the book-entry Notes. Under its usual procedures, DTC mails  
an omnibus proxy (an "Omnibus Proxy") to us as soon as possible after the       
applicable record date. The Omnibus Proxy assigns Cede & Co.'s consenting or    
voting rights to those Direct Participants to whose accounts the Notes are      
credited on the applicable record date (identified in a listing attached to the 
Omnibus Proxy).                                                                 

Principal, premium, if any, and interest payments on the Global Notes 
representing the Notes will be made to DTC. DTC's practice is to credit Direct  
Participants' accounts upon DTC's receipt of funds, on the applicable payment   
date in accordance with the respective holdings of the Direct Participants shown
on DTC's records. Payments by Participants to Beneficial Owners will be governed
by standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street name",
and will be the responsibility of such Participant and not of DTC, the Trustee  
or the Company, subject to any statutory or regulatory requirements as may be in
effect from time to time. Payment of principal, premium, if any, and interest to
Cede & Co. (or such other nominee as may be requested by an authorized          
representative of DTC) is our responsibility or that of the Trustee,            
disbursement of such payments to Direct Participants shall be the responsibility
of DTC, and disbursement of such payments to the Beneficial Owners shall be the 
responsibility of Direct and Indirect Participants. Neither we nor the Trustee  
will have any responsibility or liability for the disbursements of payments in  
respect of ownership interests in the Notes by DTC or the Direct or Indirect    
Participants or for maintaining or reviewing any records of DTC or the Direct or
Indirect Participants relating to ownership interests in the Notes or the       
disbursements of payments in respect thereof.                                   

  DTC may discontinue providing its services as securities depository with
respect to the Notes at any time by giving reasonable notice to us or the       
Trustee. We may decide to discontinue use of the system of book-entry transfers 
through DTC or a successor securities depository. Under such circumstances, and 
in the event that a successor securities depository is not obtained, Notes in   
definitive form are required to be printed and delivered.                       

  The information in this section concerning DTC and DTC's system has been
obtained from sources that we believe to be reliable, but is subject to any     
changes to the arrangements between us and DTC and any changes to such          
procedures that may be instituted unilaterally by DTC.                          

ENFORCEABILITY OF JUDGMENTS 

     Since a substantial portion of our assets and those of our Subsidiaries are
outside the United States, any judgment obtained in the United States against us
or any of our Subsidiaries, including judgments with respect to the payment of  
principal, interest, Additional Amounts or redemption price with respect to the 
Notes, may not be collectible within the United States.                         

    We have been informed by our Canadian counsel, McCarthy Tetrault LLP, that
the laws of the Province of British Columbia and the federal laws of Canada     
applicable therein permit an action to be brought in a court of competent       
jurisdiction in the Province of British Columbia (a "British Columbia Court") on
any final and conclusive judgment in personam (i.e., against the person) of a   
Federal or state court sitting in the State of New York ("New York Court")      
against us that is subsisting and unsatisfied respecting the enforcement of the 
Notes or the Indenture, that is not impeachable as void or voidable under the   
laws of the State of New York and that is for a sum certain if (1) the New York 
Court that rendered such judgment had jurisdiction over the judgment debtor, as 
recognized by a British Columbia Court (and submission by us in the             

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Notes or the Indenture to the jurisdiction of the New York Court will be deemed 
sufficient for this purpose); (2) such judgment was not obtained by fraud or in 
a manner contrary to natural justice, and the enforcement thereof would not be  
either inconsistent with public policy, as the term is defined by a British     
Columbia Court, or contrary to any order made by the Attorney General of Canada 
under the Foreign Extraterritorial Measures Act (Canada); (3) the enforcement of
such judgment in British Columbia does not constitute, directly or indirectly,  
the enforcement of foreign revenue, expropriatory or penal laws; (4) in an      
action to enforce a default judgment, the judgment does not contain a manifest  
error on its face; and (5) the action to enforce such judgment is commenced     
within six years of the date of such judgment; provided that a British Columbia 
Court may stay an action to enforce a foreign judgment if an appeal of the      
judgment is pending or the time for appeal has not expired; and provided further
that under the Currency Act (Canada), a British Columbia Court may only give    
judgment in Canadian dollars.                                                   

CONSENT TO JURISDICTION AND SERVICE 

  The Indenture provides that we will irrevocably designate and appoint CT
Corporation System (and any successor entity), as our agent for service of      
process in any suit or proceeding arising out of or relating to the Indenture or
the Notes for actions brought in any federal or state court located in the      
Borough of Manhattan in the City of New York and will submit to such            
jurisdiction.                                                                   

AMENDMENTS AND WAIVERS

     Subject to certain exceptions, the Indenture may be amended with respect to
the Notes with the consent of the holders of not less than a majority in        
principal amount of the Notes and any past default or compliance with any       
provisions may be waived with such a consent of the holders of a majority in    
principal amount of the outstanding Notes. However, without the consent of each 
holder of outstanding Notes, no amendment may, among other things, (1) reduce   
the amount of the Notes whose holders must consent to an amendment, (2) reduce  
the rate of or extend the time for payment of interest on any Notes, (3) reduce 
the principal of or extend the Stated Maturity of any Notes, (4) reduce the     
premium payable upon the redemption of any Notes or change the time at which any
Notes may or shall be redeemed, (5) make any Notes payable in currency other    
than that stated in the Notes, (6) make any change to the provisions of the     
Indenture described under "-- Additional Amounts for Canadian Withholding Taxes"
above that adversely affects the rights of any holder of the Notes, (7) impair  
the rights of any holder of the Notes to receive payment of principal of and    
interest on such holder's Notes (including any Additional Amount) on or after   
the due dates therefor or to institute suit for the enforcement of any payment  
on or with respect to such holder's Notes, (8) make any change in the Guarantee 
of the Notes by any Guarantor that would adversely affect any holder of the     
Notes or (9) make any change in the amendment provisions which require each     
holder's consent or in the provisions which limit suits by holders.             

Without the consent of any holder of the Notes, we and the Trustee may
amend the Indenture to cure any ambiguity, defect or inconsistency, to provide  
for the assumption by a successor corporation of our obligations or those of a  
Guarantor under the Indenture to add Guarantees with respect to the Notes, to   
secure all or any of the Notes, to add to our covenants or to add Events of     
Default for the benefit of the holders of the Notes or to surrender any right or
power conferred upon us, to make any change that does not adversely affect the  
rights of any holder of the Notes in any material respect, to establish the form
or terms of the Notes, to supplement any of the provisions of the Indenture to  
the extent necessary to permit or facilitate the defeasance or discharge of the 
Notes that does not adversely affect the rights of any holders of the Notes in  
any material respect, to change or eliminate any provision of the Indenture that

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becomes effective only when there is not outstanding any debt security of any   
series issued under the Indenture which is entitled to the benefit of such      
provision or to comply with any requirement of the Commission in connection with
the qualification of the Indenture under the Trust Indenture Act.               

The consent of the holders of the Notes is not necessary under the    
Indenture to approve the particular form of any proposed amendment. It is       
sufficient if such consent approves the substance of the proposed amendment.    

   After an amendment under the Indenture becomes effective, we are required
to mail to holders of the Notes a notice briefly describing such amendment.     
However, the failure to give such notice to all holders of the Notes, or any    
defect therein, will not impair or affect the validity of the amendment.        

DEFEASANCE

     We at any time may terminate all our and each Guarantor's obligations under
the Notes and our obligations and those of each such Guarantor under the        
Indenture with respect to the Notes ("legal defeasance"), except for certain    
obligations, including those respecting the defeasance trust and obligations to 
register the transfer or exchange of the Notes, to replace mutilated, destroyed,
lost or stolen Notes and to maintain a registrar and paying agent in respect of 
the Notes. We at any time may terminate our and each Guarantor's obligations    
with respect to the Notes under the covenants described above under "Certain    
Covenants", the operation of the cross acceleration provision, the bankruptcy   
default provision with respect to Significant Subsidiaries, the guarantee       
default provision and the limitations contained in clause (2) in the first      
paragraph and the limitations contained in the second paragraph of "Successor   
Company and Guarantors" above ("covenant defeasance").                          

We may exercise our legal defeasance option notwithstanding our prior 
exercise of our covenant defeasance option. If we exercise our legal defeasance 
option with respect to the Notes, payment of the Notes may not be accelerated   
because of an Event of Default with respect thereto and each Guarantor will be  
released from its Guarantee with respect to the Notes. If we exercise our       
covenant defeasance option with respect to the Notes, payment of the Notes may  
not be accelerated because of an Event of Default specified in clause (3) (with 
respect to Guarantors only), (4), (5), (6), (7) (with respect to Significant    
Subsidiaries only), or (8) of the first paragraph under "Defaults" above or     
because of our failure to comply with clause (2) in the first paragraph of      
"Successor Company and Guarantors" above and each Guarantor will be released    
from its Guarantee with respect to the Notes.                                   

     In order to exercise either defeasance option with respect to the Notes, we
must irrevocably deposit in trust (the "defeasance trust") with the Trustee     
money or U.S. Government Obligations for the full payment of principal, premium 
(if any) and interest on the Notes to redemption or maturity, as the case may   
be, and must comply with certain other conditions, including delivering to the  
Trustee: (1) an Opinion of Counsel in the United States to the effect that      
holders of the Notes will not recognize income, gain or loss for United States  
Federal income tax purposes as a result of such deposit and defeasance and will 
be subject to United States Federal income tax on the same amounts, in the same 
manner and at the same times as would have been the case if such deposit and    
defeasance had not occurred (and, in the case of legal defeasance only, such    
Opinion of Counsel must be based on a ruling of the United States Internal      
Revenue Service or other change in applicable United States Federal income tax  
law); (2) an Opinion of Counsel in Canada to the effect that (A) holders of the 
Notes will not recognize income, gain or loss for Canadian federal or provincial
income tax or other tax purposes as a result of such legal defeasance or        
covenant defeasance, as applicable, and will be subject to Canadian federal and 
provincial income tax and other tax on the same amounts, in the same manner and 
at the same times as would have been the case if such defeasance or covenant    
defeasance, as applicable,                                                      
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had not occurred, and (B) payments out of the defeasance trust will be free and 
exempt from any and all withholding and other income taxes of whatever nature of
Canada or any province thereof or political subdivision thereof or therein      
having the power to tax, except in the case of a payment made to a holder of the
Notes (a) with which we do not deal at arm's length (within the meaning of the  
Income Tax Act (Canada)) at the time of the making of such payment or (b) which 
is subject to such taxes by reason of its being connected with Canada or any    
province or territory thereof otherwise than by the mere holding of the Notes or
the receipt of payments thereunder; (3) a certificate from a nationally         
recognized firm of independent accountants opining that the payments of         
principal and interest when due and without investment on the U.S. Government   
Obligations plus any deposited money without investment will provide cash at    
such times and in such amounts as will be sufficient to pay the principal,      
premium (if any) and interest when due on all the Notes to maturity or          
redemption, as the case may be; and (4) an opinion of counsel stating that the  
defeasance trust does not constitute, or is qualified as, a regulated investment
company under the Investment Company Act of 1940, as amended. In addition, we   
can only exercise either type of defeasance if (1) during the 91 days that      
follow the establishment of the defeasance trust, no Default under the          
bankruptcy default provision occurs to us and is continuing at the end of the   
period, (2) no Default has occurred and is continuing on the date the defeasance
trust is established after giving effect to the establishment of the defeasance 
trust, and (3) depositing funds into the defeasance trust does not constitute a 
default under any other of our binding agreements.                              

THE TRUSTEE 

The Bank of New York is the Trustee under the Indenture and has been  
appointed by us as registrar and paying agent with respect to the Notes.        

GOVERNING LAW 

    The Indenture is, and the Notes will be, governed by the laws of the State
of New York.                                                                    

CERTAIN DEFINITIONS 

  Set forth below is a summary of certain of the defined terms used in the
Indenture, as they would be applicable to the Notes. Reference is made to the   
Indenture for the full definition of all such terms, as well as any other terms 
used herein for which no definition is provided. Except as otherwise indicated, 
all accounting terms not otherwise defined in the Indenture will have the       
meanings assigned to them in accordance with GAAP (as defined below) and all    
accounting determinations and computations based on GAAP contained in the       
Indenture shall be determined and computed in conformity with GAAP.             

"ATTRIBUTABLE INDEBTEDNESS" in respect of a Sale/Leaseback Transaction
means, as of the date of determination, the lesser of (1) the fair market value 
of the property subject to such Sale/Leaseback Transaction (as determined in    
good faith by our Board of Directors) or (2) the present value (discounted at a 
rate per annum equal to the coupon on the Notes, compounded annually) of the    
total obligations of the lessee for rental payments (excluding amounts required 
to be paid on account of operating costs, maintenance and repairs, insurance,   
taxes, assessments, utility rates and similar charges) during the remaining term
of such lease (including any period for which such lease has been extended).    

    "AVERAGE LIFE" means, as of the date of determination, with respect to any
Indebtedness, the quotient obtained by dividing (1) the sum of the products of  
the number of years from the date of determination to the dates of each         
successive scheduled principal payment of such Indebtedness multiplied by the   
amount of such payment by (2) the sum of all such payments.                     

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    "BOARD OF DIRECTORS" means our Board of Directors or any committee thereof
duly authorized to act on behalf of such Board of Directors, except that for    
purposes of the definitions of "Change of Control" and "Continuing Directors,"  
the term "Board of Directors" shall mean our Board of Directors and not any     
committee thereof.                                                              

"BUSINESS DAY" means each day which is not a Legal Holiday.           

"CAPITAL LEASE OBLIGATIONS" of a person means any obligation which is 
required to be classified and accounted for as a capital lease on the face of a 
balance sheet of such person prepared in accordance with GAAP; the amount of    
such obligation shall be the capitalized amount thereof, determined in          
accordance with GAAP; except that the Stated Maturity thereof shall be deemed to
be the date of the last payment of rent or any other amount due under such lease
prior to the first date upon which such lease may be terminated by the lessee   
without payment of a penalty.                                                   

   "CAPITAL STOCK" of any person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or       
interests in (however designated) equity of such person, including any Preferred
Stock, but excluding any debt securities convertible into or exchangeable for   
such equity.                                                                    

"CHANGE OF CONTROL" means the occurrence of any of the following:     

     (1)  the direct or indirect sale, transfer, conveyance or other disposition
        (other than by way of amalgamation, merger or consolidation), in one
       or a series of related transactions, of all or substantially all of
      our properties or assets and those of our Restricted Subsidiaries,
      taken as a whole, to any "person" (as that term is used in Section
13(d)(3) of the Exchange Act);                              

 (2)  the adoption of a plan relating to our liquidation or dissolution;

  (3)  the consummation of any transaction (including, without limitation,
          any amalgamation, merger or consolidation) the result of which is that
       any "person" (as defined in clause (1) of this definition), becomes
         the beneficial owner, directly or indirectly, of more than 50% of our
        Voting Stock, measured by voting power rather than number of shares;

(4)  the first day on which a majority of the members of our Board of 
Directors are not Continuing Directors; or                  

    (5)  we amalgamate or consolidate with, or merge with or into, any person,
     or any person amalgamates or consolidates with, or merges with or
         into, us, in any such event pursuant to a transaction in which any of
        the outstanding Voting Stock of us or such other person is converted
        into or exchanged for cash, securities or other property, other than
       any such transaction where our Voting Stock outstanding immediately
       prior to such transaction is converted into or exchanged for Voting
        Stock (other than Disqualified Stock) of the surviving or transferee
        person constituting a majority of the Voting Stock of such surviving
        or transferee person, measured by voting power rather than number of
shares, immediately after giving effect to such issuance.   

   "CODE" means the United States Internal Revenue Code of 1986, as amended.

   "CONSOLIDATED NET WORTH" at any date of determination means the following
amount, as shown on our and our Subsidiaries' most recent consolidated balance  
sheet, determined on a consolidated basis in accordance with GAAP, as of the end
of our most recent fiscal quarter ending at least 45 days prior to the date of  
determination: (1) the consolidated shareholders' equity of our common          
stockholders plus (2) the respective amounts reported with respect to any class 
or series of our Preferred Stock (other than Exchangeable Stock and Redeemable  
Stock) but only to the extent of any cash received by us upon issuance of such  
Preferred Stock, less all                                                       

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write-ups (other than write-ups resulting from foreign currency translations and
write-ups of tangible assets of a going concern business made within 12 months  
after the acquisition of such business) subsequent to the date of the Indenture 
in the book value of any asset owned by us or any of our Subsidiaries.          

     "CONTINUING DIRECTORS" means as of any date of determination, any member of
our Board of Directors who:                                                     

(1)  was a member of such Board of Directors on May 31, 2002; or      

    (2)  was nominated for election or elected to such Board of Directors with
   the approval of a majority of the Continuing Directors who were
        members of such Board of Directors at the time of such nomination or
election.                                                   

   "DEFAULT" means any event which is, or after notice or passage of time or
both would be, an Event of Default.                                             

    "DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is          
exchangeable, in each case at the option of the holder of the Capital Stock), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant 
to a sinking fund obligation or otherwise, or redeemable at the option of the   
holder of the Capital Stock, in whole or in part, on or prior to the date that  
is 91 days after the date on which the Notes mature.                            

"EXCHANGEABLE STOCK" means any Capital Stock which is exchangeable or 
convertible into another security (other than Capital Stock which is neither    
Exchangeable Stock nor Redeemable Stock).                                       

 "FUNDED INDEBTEDNESS" of a person means all Indebtedness of such person
which matures more than one year after the time of determination thereof or     
which is extendible or renewable at the option of such person to a time more    
than one year after the time of determination thereof (whether or not renewed or
extended).                                                                      

"GAAP" means generally accepted accounting principles in Canada as in 
effect as of the date of the Indenture.                                         

"GRADATION" means a gradation within a Rating Category or a change to 
another Rating Category, which shall include "+" and "- ," in the case of S&P's 
current Rating Categories (e.g., a decline from BB+ to BB would constitute a    
decrease of one gradation); "1," "2" and "3," in the case of Moody's current    
Rating Categories (e.g., a decline from B1 to B2 would constitute a decrease of 
one gradation); or the equivalent in respect of successor Rating Categories of  
S&P or Moody's or Rating Categories used by Rating Agencies other than S&P or   
Moody's.                                                                        

  "GUARANTEE" means any obligation, contingent or otherwise, of any person
directly or indirectly guaranteeing any Indebtedness of any other person and any
obligation, direct or indirect, contingent or otherwise, of such person (1) to  
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such other person (whether arising by virtue
of partnership arrangements, or by agreement to keep-well, to purchase assets,  
goods, securities or services, to take-or-pay, or to maintain financial         
statement conditions or otherwise) or (2) entered into for purposes of assuring 
in any other manner the obligee of such Indebtedness or other obligation of the 
payment thereof or to protect such obligee against loss in respect thereof (in  
whole or in part); provided, however, that the term "Guarantee" shall not       
include endorsements for collection or deposit in the ordinary course of        
business. The term "Guarantee" used as a verb has a correlative meaning.        

     "GUARANTOR" means any person that becomes a guarantor of the Notes pursuant
to the terms of the Indenture, and its respective successors.                   

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  "INCUR" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a person      
existing at the time such person becomes a Subsidiary (whether by merger,       
consolidation, acquisition or otherwise) or is designated as a Restricted       
Subsidiary or an Unrestricted Subsidiary shall be deemed to be Incurred by such 
Subsidiary at such time. The term "Incurrence" when used as a noun shall have a 
correlative meaning.                                                            

    "INDEBTEDNESS" of any person means, without duplication, (1) the principal
of, premium (if any) in respect of and interest on (A) indebtedness of such     
person for money borrowed and (B) indebtedness evidenced by notes, debentures,  
bonds or other similar instruments related to or for money borrowed for the     
payment of which such person is responsible or liable; (2) all Capital Lease    
Obligations of such person and all Attributable Indebtedness in respect of Sale/
Leaseback Transactions entered into by such person; (3) all obligations of such 
person issued or assumed as the deferred purchase price of property, all        
conditional sale obligations of such person and all obligations of such person  
under any title retention agreement (but excluding in each case trade accounts  
payable or accrued liabilities arising in the ordinary course of business); (4) 
all obligations of such person for the reimbursement of any obligor on any      
letter of credit, banker's acceptance or similar credit transaction (other than 
obligations with respect to letters of credit securing obligations (other than  
obligations described in (1) through (3) above) entered into in the ordinary    
course of business of such person to the extent such letters of credit are not  
drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no   
later than the third Business Day following receipt by such person of a demand  
for reimbursement following payment on the letter of credit); (5) all           
obligations of such person with respect to the redemption, repayment or other   
repurchase of, in the case of a Subsidiary, any Preferred Stock and, in the case
of any other person, any Redeemable Stock (but excluding any accumulated        
dividends); (6) all obligations of the type referred to in clauses (1) through  
(5) of other persons for the payment of which such person is responsible or     
liable, directly or indirectly, as obligor, guarantor or otherwise, including   
any Guarantees of such obligations; and (7) all obligations of the type referred
to in clauses (1) through (6) of other persons secured by any Lien on any       
property or asset of such person (whether or not such obligation is assumed by  
such person), the amount of such obligation being deemed to be the lesser of the
value of such property or assets or the amount of the obligation so secured. The
amount of Indebtedness of any person at any date shall be the outstanding       
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the    
obligation, of any contingent obligations at such date.                         

"INVESTMENT" in any person means any direct or indirect advance, loan 
(other than advances to customers, employees or suppliers in the ordinary course
of business that are recorded as accounts receivable on the balance sheet of    
such person) or other extension of credit (including by way of Guarantee or     
similar arrangement) or capital contribution to (by means of any transfer of    
cash or other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,     
Indebtedness or other similar instruments issued by, such person.               

 "LEGAL HOLIDAY" means each day that is a Saturday, a Sunday or a day on
which banking institutions are not required to be open in the State of New York 
or the City of Vancouver, Canada.                                               

   "LIEN" means any mortgage, pledge, security interest, conditional sale or
other title retention agreement or other similar lien.                          

"MOODY'S" means Moody's Investors Service, Inc. and its successors.   

"NON-CONVERTIBLE CAPITAL STOCK" means, with respect to any person, any
non-convertible Capital Stock of such person and any Capital Stock of such      
person convertible solely into non-                                             

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convertible common stock of such person; provided, however, that Non-Convertible
Capital Stock shall not include Redeemable Stock or Exchangeable Stock.         

   "NON-RECOURSE INDEBTEDNESS" means Indebtedness (1) as to which neither we
nor any of our Restricted Subsidiaries (A) provide credit support (including any
undertaking, agreement or instrument which would constitute Indebtedness) or (B)
is directly or indirectly liable and (2) no default with respect to which       
(including any rights which the holders thereof may have to take enforcement    
action) would permit (upon notice, lapse of time or both) any holder of any     
other Indebtedness of ours or that of any of our Restricted Subsidiaries to     
declare a default on such other Indebtedness or cause a payment thereof to be   
accelerated or payable prior to its Stated Maturity.                            

"PERMITTED LIENS" means, with respect to any person, (1) pledges or   
deposits by such person under workmen's compensation laws, unemployment         
insurance laws or similar legislation, or good faith deposits in connection with
bids, tenders, contracts (other than for the payment of Indebtedness) or leases 
to which such person is a party, or deposits to secure public or statutory      
obligations of such person or deposits of cash or government bonds to secure    
surety or appeal bonds to which such person is a party, or deposits as security 
for contested taxes or import duties or for the payment of rent, in each case   
Incurred in the ordinary course of business; (2) Liens imposed by law, such as  
carriers', warehousemen's and mechanics' Liens, and maritime liens on cargo for 
freight not yet due, in each case for sums not yet due or being contested in    
good faith by appropriate proceedings, other Liens arising out of judgments or  
awards against such person with respect to which such person shall then be      
proceeding with an appeal or other proceedings for review, and any right of     
setoff, refund or charge-back available to any bank or other financial          
institution, (3) Liens for property taxes not yet subject to penalties for      
non-payment or which are being contested in good faith and by appropriate       
proceedings; (4) Liens in favor of issuers of surety bonds or letters of credit 
issued pursuant to the request of and for the account of such person in the     
ordinary course of its business; provided, however, that such letters of credit 
do not constitute Indebtedness; (5) minor survey exceptions, minor encumbrances,
easements or reservations of, or rights of others for, licenses, rights of way, 
sewers, pipelines, railways, cables and conduits, electric lines, telegraph and 
telephone lines and other similar purposes, or zoning or other restrictions as  
to the use of real properties or Liens incidental to the conduct of the business
of such person or to the ownership of its properties which were not Incurred in 
connection with Indebtedness and which do not in the aggregate materially       
adversely affect the value of such properties or materially impair their use in 
the operation of the business of such person; (6) Liens securing Indebtedness or
other obligations in the ordinary course of business of a Restricted Subsidiary 
or us owing to and held by us or another Restricted Subsidiary; (7) Liens       
existing on the date of the Indenture; (8) Liens on property or shares of stock 
of a person at the time that such person becomes a Restricted Subsidiary;       
provided, however, that such Liens may not extend to any other property or      
assets owned by us or a Restricted Subsidiary; provided further, however, that  
such Liens are not created, Incurred or assumed in connection with, or in       
contemplation of, or to provide credit support in connection with, such person  
becoming a Restricted Subsidiary; (9) Liens on property or assets at the time we
or a Restricted Subsidiary acquires such property or assets, including any      
acquisition by means of an amalgamation, merger or consolidation with or into us
or a Restricted Subsidiary; provided, however, that such Liens may not extend to
any other property or assets owned by us or a Restricted Subsidiary; provided   
further, however, that such Liens are not created, Incurred or assumed in       
connection with, or in contemplation of, or to provide credit support in        
connection with, such acquisition; (10) Liens on any property or assets securing
any Indebtedness created or assumed as all or any part of the purchase price or 
cost of construction or improvement of real or tangible personal property or    
assets, whether or not secured, which Indebtedness was created prior to, at the 
time of or within 120 days after the later of the acquisition, completion of    
construction or commencement of full operation of such property or assets; (11) 
Liens on cash or marketable securities of us or any Restricted Subsidiary       
granted in                                                                      
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the ordinary course of business in connection with (A) any currency swap        
agreements, forward exchange rate agreements, foreign currency futures or       
options, exchange rate insurance and other similar agreements or arrangements;  
(B) any interest rate swap agreements, forward rate agreements, interest rate   
cap or collar agreements or other similar financial agreements or arrangements; 
or (C) any agreements or arrangements entered into for the purpose of hedging   
product prices; and (12) Liens to secure any refinancing, extension, renewal or 
replacement ("refinancing") as a whole, or in part, of any Indebtedness secured 
by any Lien referred to in the foregoing clauses (7), (8), (9) and (10) ;       
provided, however, that (A) such new Lien shall be limited to all or part of the
same property that secured the original Lien (plus improvements on such         
property) and (B) the Indebtedness secured by such Lien at such time is not     
increased to any amount greater than the sum of (a) the outstanding principal   
amount of the Indebtedness being refinanced and (b) an amount necessary to pay  
any fees and expenses, including premiums, related to such refinancing.         

    "PERSON" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated 
organization, government or any agency or political subdivision thereof or any  
other entity.                                                                   

"PREFERRED STOCK", as applied to the Capital Stock of any corporation,
means Capital Stock of any class or classes (however designated) which is       
preferred as to the payment of dividends, or as to the distribution of assets   
upon any voluntary or involuntary liquidation or dissolution of such            
corporation, over shares of Capital Stock of any other class of such            
corporation.                                                                    

    "PRINCIPAL" of a Note means the principal of the Note plus the premium, if
any, payable on the Note which is due or overdue or, to the extent permitted by 
law, is to become due at the relevant time.                                     

  "RATING AGENCIES" means (a) S&P and Moody's or (b) if S&P and Moody's or
both of them are not making ratings of the Notes publicly available, a          
nationally recognized U.S. rating agency or agencies, as the case may be,       
selected by us, which will be substituted for S&P or Moody's or both, as the    
case may be.                                                                    

 "RATING CATEGORIES" means (1) with respect to S&P, any of the following
categories (any of which may include a "+" or -"): AAA, AA, A, BBB, BB, B, CCC, 
C and D (or equivalent successor categories); (2) with respect to Moody's, any  
of the following categories (any of which may include a "1," "2" or "3"): Aaa,  
Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories); and   
(3) the equivalent of any such categories of S&P or Moody's used by another     
Rating Agency, if applicable.                                                   

  "RATING DECLINE" means the occurrence of a decrease in the rating of the
Notes by any Rating Agency by one or more Gradations at any time within 90 days 
(which period shall be extended so long as the rating of the Notes is under     
publicly announced consideration for a possible downgrade by any Rating Agency) 
after the date of public notice of a Change of Control, or the intention of us  
or any person to effect a Change of Control.                                    

   "REDEEMABLE STOCK" means any Capital Stock that by its terms or otherwise
is required to be redeemed prior to the first anniversary of the Stated Maturity
of the Notes or is redeemable at the option of the holder thereof at any time   
prior to such first anniversary.                                                

"RESTRICTED SUBSIDIARY" means each of our Subsidiaries other than our 
Unrestricted Subsidiaries.                                                      

"S&P" means Standard & Poor's Ratings Services, a division of The     
McGraw-Hill Companies, Inc., and its successors.                                

 "SALE/LEASEBACK TRANSACTION" means an arrangement with any person other
than us or a Restricted Subsidiary providing for the leasing by us or any       
Restricted Subsidiary of any real or tangible personal property, which property 
has been or is to be sold or transferred by us or such                          
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Restricted Subsidiary to such person in contemplation of such leasing; provided,
however, that any subsequent transfer of any such arrangement between us and a  
Restricted Subsidiary or between Restricted Subsidiaries, whereby we or a       
Restricted Subsidiary ceases to be the lessor under such arrangement, shall be  
deemed to constitute a Sale/ Leaseback Transaction at such time.                

  "SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary that would be a
"Significant Subsidiary" of us within the meaning of Rule 1-02 under Regulation 
S-X promulgated by the United States Securities and Exchange Commission.        

   "STATED MATURITY" means, with respect to any security, the date specified
in such security as the fixed date on which the principal of such security is   
due and payable, including pursuant to any mandatory redemption provision (but  
excluding any provision providing for the repurchase of such security at the    
option of the holder thereof upon the happening of any contingency unless such  
contingency has occurred).                                                      

"SUBSIDIARY" means, in respect of any person, any corporation, limited
liability company, association, partnership or other business entity of which   
more than 50% of the total voting power of shares of Capital Stock or other     
interests (including partnership interests) entitled (without regard to the     
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by 
(1) such person, (2) such person and one or more Subsidiaries of such person or 
(3) one or more Subsidiaries of such person.                                    

     "UNRESTRICTED SUBSIDIARY" means (1) any Subsidiary of ours that at the time
of determination shall be designated an Unrestricted Subsidiary by the Board of 
Directors in the manner provided below and (2) each Subsidiary of an            
Unrestricted Subsidiary. The Board of Directors may designate any newly acquired
or newly formed Subsidiary of ours (other than a Restricted Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns  
any Capital Stock or Indebtedness of, or holds any Lien on any property of, ours
or any other Subsidiary that is not a Subsidiary of the Subsidiary to be so     
designated; provided, however, that, immediately after giving effect to such    
designation no Default shall have occurred and be continuing. The Board of      
Directors may designate any Unrestricted Subsidiary to be a Restricted          
Subsidiary; provided, however, that immediately after giving effect to such     
designation no Default shall have occurred and be continuing. Any such          
designation by the Board of Directors shall be evidenced to the Trustee by      
promptly filing with the Trustee a copy of the board resolution giving effect to
such designation and an Officers' Certificate certifying that such designation  
complied with the foregoing provisions. As of the date of this prospectus, we do
not have any Unrestricted Subsidiaries.                                         

 "U.S. GOVERNMENT OBLIGATIONS" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of 
America (including any agency or instrumentality thereof) for the payment of    
which the full faith and credit of the United States of America is pledged and  
which are not callable at the issuer's option.                                  

     "VOTING STOCK" of any person as of any date means the Capital Stock of such
person that is at the time entitled to vote in the election of the board of     
directors of such person.                                                       

CREDIT RATINGS

   The Notes have been assigned a rating of BBB- by Standard & Poor's Rating
Services, a division of The McGraw-Hill Companies, Inc., a rating of Ba1 by     
Moody's Investors Service, Inc. and a rating of BBB by Fitch, Inc. S&P rates    
debt instruments by rating categories from a high of AAA to a low of D, with a  
"+" or "-" indicating relative strength within the rating category. Moody's     
rates debt instruments by rating category from a high of Aaa to a low of D, with
a "1", "2" or "3" indicating relative strength within the rating category. Fitch
rates debt instruments by                                                       
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rating category from a high of AAA to a low of D, with a "+" or "-" indicating  
relative strength within the rating category. Prospective purchasers of Notes   
should consult with the rating agencies with respect to the interpretation of   
the foregoing ratings and the implication of those ratings. The credit ratings  
accorded to the Notes are not recommendations to buy, sell or hold the Notes and
may be subject to revision or withdrawal by S&P, Moody's and Fitch at any time. 

PRO FORMA INTEREST COVERAGE 

 The interest coverage set forth below has been prepared and included in
this prospectus in accordance with the disclosure requirements of applicable    
Canadian securities laws and has been calculated on a pro forma basis after     
giving effect to the issuance of the Notes and the repayment of our 7.40% Notes 
from the proceeds of this offering.                                             

  The annual interest requirements on our long term debt (using applicable
interest and exchange rates) for the twelve months ended December 31, 2001, and 
for the twelve months ended March 31, 2002, were $39.3 million and $39.3        
million, respectively. Our earnings before deduction of interest on long term   
debt and income taxes for the twelve months ended December 31, 2001, and for the
twelve months ended March 31, 2002, amounted to $132.6 million and $17.8        
million, respectively. For the twelve months ended December 31, 2001, these     
amounts are 3.4 times annual interest requirements. For the twelve months ended 
March 31, 2002, the dollar amount of earnings coverage deficiency was $21.6     
million.                                                                        

     Our earnings before deduction of depreciation and amortization, interest on
long term debt and income taxes for the twelve months ended December 31, 2001,  
and for the twelve months ended March 31, 2002, amounted to $246.3 million and  
$132.1 million, respectively. For the twelve months ended December 31, 2001 and 
March 31, 2002, these amounts are 6.3 and 3.4 times the annual interest         
requirements, respectively.                                                     

TAX CONSIDERATIONS

    Purchasers of the Notes should consult their own tax advisors with respect
to their particular circumstances and with respect to the effects of state,     
local or foreign (including Canadian) tax laws to which they may be subject.    

CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS

   The following discussion is a general summary of certain anticipated U.S.
federal income tax consequences of the purchase, ownership and disposition of   
Notes and deals only with Notes held as capital assets, within the meaning of   
Section 1221 of the Code, by U.S. Holders who purchase Notes in the offering at 
the offering price. As used herein, a U.S. Holder means a beneficial owner of   
the Notes that is, for U.S. federal income tax purposes:                        

- an individual who is a citizen or resident of the United States;    

 - a corporation created or organized in or under the laws of the United
States or of any political subdivision of the United States;      

 - an estate, the income of which is includible in gross income for U.S.
federal income tax purposes regardless of its source; or          

- a trust, in general, if a U.S. court is able to exercise primary    
   supervision over the administration of the trust and one or more U.S.
       persons have authority to control all substantial decisions of the trust.

  This discussion is general and does not consider the U.S. federal income
tax consequences of special classes of holders, including but not limited to    
dealers in securities or currencies,                                            

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banks, tax-exempt organizations, life insurance companies, financial            
institutions, broker-dealers, U.S. Holders holding the Notes as part of a       
straddle, hedge, conversion transaction, synthetic security or other integrated 
transaction, or U.S. Holders whose functional currency is not the U.S. dollar.  
This discussion also does not consider the U.S. Federal income tax consequences 
of any holder who owns Notes through a partnership or other pass through entity.
U.S. Holders who purchase Notes at a price other than the offering price should 
consult their tax advisors as to the possible applicability to them of the      
amortizable bond premium or market discount rules. This summary does not address
the effect of any U.S. state, local, or federal estate and gift tax on a U.S.   
Holder of the Notes. The summary is based on the Code, its legislative history, 
existing and proposed regulations, and published rulings and court decisions,   
all as currently in effect and all subject to change at any time, possibly with 
retroactive effect.                                                             

   Prospective purchasers of the Notes should consult their own tax advisors
concerning the consequences, in their particular circumstances, under U.S.      
federal income tax laws and the laws of any relevant state, local or other      
foreign tax jurisdiction of purchase, ownership and disposition of the Notes.   

PAYMENTS OF INTEREST                                                            

  The gross amount of interest paid on the Notes (including any Additional
Amounts and any Canadian tax attributed therefrom) will be includible in the    
gross income of a U.S. Holder as ordinary interest income at the time it is     
received or accrued, depending on whether the holder uses the cash or accrual   
method of accounting for U.S. federal income tax purposes. Interest paid by     
Methanex on the Notes will constitute foreign-source income and will generally  
be classified as "passive income" or, in the case of certain U.S. Holders,      
"financial services income" for purposes of determining the U.S. foreign tax    
credit limitation. The rules relating to foreign tax credits are extremely      
complex and the availability of a foreign tax credit depends on numerous        
factors. Prospective purchasers of the Notes should consult their own tax       
advisers concerning the application of the United States foreign tax credit     
rules to their particular situation.                                            

SALE, REDEMPTION AND OTHER DISPOSITION OF THE NOTES                             

Upon the sale, exchange or retirement of a Note, a U.S. Holder will   
generally recognize taxable gain or loss equal to the difference between the    
amount realized (not including any amounts received that are attributable to    
accrued and unpaid interest, which are taxable as ordinary interest income in   
accordance with the holder's method of accounting) and the U.S. Holder's tax    
basis in the Note. A U.S. Holders tax basis in a Note will generally be its     
cost. Such gain or loss recognized on the sale or retirement of a Note will be  
capital gain or loss and will be long-term capital gain or loss if the U.S.     
Holder held the Note for more than one year at the time of the disposition. The 
deductibility of capital losses is subject to limitations. Gain recognized by a 
U.S. Holder generally will be treated as United States source income. U.S.      
Holders should consult their tax advisors regarding the source of loss          
recognized on the sale, exchange or retirement of a Note.                       

INFORMATION AND BACKUP WITHHOLDING                                              

Payments of principal and interest on the Notes held by certain       
non-corporate holders and the proceeds of a disposition of such Notes may be    
subject to U.S. information reporting requirements. Such payments also may be   
subject to United States backup withholding if the holder does not provide a    
taxpayer identification number or otherwise establish an exemption. The holder  
may credit the amounts withheld against its United States federal income tax    
liability and claim a refund for amounts withheld in excess of its tax          
liability. U.S. Holders should consult their tax advisors as to their           
qualification for exemption from backup withholding and the procedure for       
obtaining such an exemption.                                                    

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CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

 The following is a summary of the principal Canadian federal income tax
consequences generally applicable to a holder of Notes acquired at original     
issuance who at all relevant times, for the purposes of the Income Tax Act      
(Canada) (the "Act"), is not resident in Canada, deals with us at arm's length, 
holds the Notes as capital property and does not use or hold and is not deemed  
to use or hold the Notes in carrying on a business in Canada (a "Holder"). For  
the purposes of the Act, related persons (as therein defined) are deemed not to 
deal at arm's length. It is a question of fact whether persons not related to   
each other deal at arm's length. This summary does not address the special tax  
consequences which may apply to a Holder of Notes who is an insurer carrying on 
business in Canada or elsewhere for the purposes of the Act.                    

This summary is based on the current provisions of the Act and the    
regulations thereunder, our understanding of the current published              
administrative and assessing practices of Canada Customs and Revenue Agency, and
all specific proposals to amend the Act and the regulations publicly announced  
by the Minister of Finance (Canada) prior to the date hereof. This summary is   
not exhaustive of all possible Canadian federal income tax considerations and   
does not otherwise take into account or anticipate changes in the law, whether  
by judicial, governmental or legislative decisions or action, nor does it take  
into account tax legislation or considerations of any province or territory of  
Canada or any jurisdiction other than Canada.                                   

   The payment of interest, principal or premium, if any, to a Holder of the
Notes will be exempt from Canadian withholding tax. No other tax on income or   
capital gains will be payable under the Act in respect of the holding,          
redemption or disposition of the Notes by a Holder. This summary is of a general
nature only and does not constitute legal or tax advice to any particular holder
of Notes. No representation is made with respect to the tax consequences to any 
particular holder. Consequently, holders of Notes should consult their own tax  
advisors with respect to their particular circumstances.                        

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UNDERWRITING

    The Company and the underwriters for the offering named below have entered
into an underwriting agreement with respect to the Notes. Subject to certain    
conditions, each underwriter has severally agreed to purchase the principal     
amount of Notes indicated in the following table.                               

                                                        [Enlarge/Download Table]

                        Underwriters                         Principal Amount of Notes
                        ------------                         -------------------------
                                                                                      
Goldman, Sachs & Co.........................................       $160,000,000       
CIBC World Markets Corp.....................................         20,000,000       
RBC Dominion Securities Corporation.........................         20,000,000       
                                                                   ------------       
     Total..................................................       $200,000,000       
                                                                   ============       

   Notes sold by the underwriters to the public will initially be offered at
the initial public offering price set forth on the cover of this Prospectus. Any
Notes sold by the underwriters to securities dealers may be sold at a discount  
from the initial public offering price of up to 0.60% of the principal amount of
Notes. Any such securities dealers may resell any Notes purchased from the      
underwriters to certain other brokers or dealers at a discount from the initial 
public offering price of up to 0.375% of the principal amount of Notes. If all  
the Notes are not sold at the initial offering price, the underwriters may      
change the offering price and the other selling terms.                          

This offering is being made in the United States pursuant to the      
multijurisdictional disclosure system implemented by the securities regulatory  
authorities in the United States and Canada. This prospectus was filed with the 
British Columbia Securities Commission, and forms part of a registration        
statement on Form F-9 filed with the United States Securities and Exchange      
Commission, to register the Notes under the United States Securities Act of     
1933, or the Securities Act, as amended, and to qualify under the securities    
laws of the Province of British Columbia the distribution of the Notes being    
offered and sold in the United States and elsewhere outside of Canada. This     
prospectus does not qualify the distribution of any Notes which may be offered  
and sold in any province of Canada, including the Province of British Columbia. 
The Notes may only be offered or sold, directly or indirectly, in Canada, or to 
or for the benefit of any resident of Canada, pursuant to exemptions from the   
prospectus requirements of Canadian securities laws, and only by securities     
dealers registered in the applicable province or pursuant to exemptions from the
registered dealer requirements. Subject to applicable law, the Notes may also be
offered outside of the United States and Canada.                                

     The Notes are a new issue of securities with no established trading market.
The Company has been advised by the underwriters that the underwriters intend to
make a market in the Notes but are not obligated to do so and may discontinue   
market making at any time without notice. No assurance can be given as to the   
liquidity of the trading market for the Notes.                                  

     In connection with the offering of the Notes, the underwriters may purchase
and sell Notes in the open market. These transactions may include short sales,  
stabilizing transactions and purchases to cover positions created by short      
sales. Short sales involve the sale by the underwriters of a greater number of  
Notes than they are required to purchase in the offering of the Notes.          
Stabilizing transactions consist of certain bids or purchases made for the      
purpose of preventing or retarding a decline in the market price of the Notes   
while the offering is in progress.                                              

The underwriters also may impose a penalty bid. This occurs when a    
particular underwriter repays to the underwriters a portion of the underwriting 
commission received by it because the representatives have repurchased Notes    
sold by or for the account of such underwriter in stabilizing or short covering 
transactions.                                                                   

   These activities by the underwriters may stabilize, maintain or otherwise
affect the market price of the Notes. As a result, the price of the Notes may be
higher than the price that otherwise might exist in the open market. If these   
activities are commenced, they may be discontinued by                           

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the underwriters at any time. These transactions may be effected in the         
over-the-counter market or otherwise.                                           

     Each underwriter has represented, warranted and agreed that: (1) it has not
offered or sold and, prior to the expiry of a period of six months from the     
closing of the offering of the Notes, will not offer or sell any Notes to       
persons in the United Kingdom except to persons whose ordinary activities       
involve them in acquiring, holding, managing or disposing of investments (as    
principal or agent) for the purposes of their businesses or otherwise in        
circumstances which have not resulted and will not result in an offer to the    
public in the United Kingdom within the meaning of the Public Offers of         
Securities Regulations 1955; (2) it has only communicated or caused to be       
communicated and will only communicate or cause to be communicated any          
invitation or inducement to engage in investment activity (within the meaning of
section 21 of the FSMA) received by it in connection with the issue or sale of  
any Notes in circumstances in which section 21(1) of the FSMA does not apply to 
the Issuer; and (3) it has complied and will comply with all applicable         
provisions of the FSMA with respect to anything done by it in relation to the   
Notes in, from or otherwise involving the United Kingdom.                       

 From time to time, the underwriters and certain of their affiliates may
have engaged, and may in the future engage, in transactions with, including     
investment banking and commercial banking transactions, and perform services,   
for the Company and its affiliates, in the ordinary course of business.         

CIBC World Markets Corp. and RBC Dominion Securities Corporation are  
affiliates of Canadian chartered banks which are lenders to the Company under   
its unsecured revolving credit facility. Consequently, the Company may be       
considered to be a connected issuer of such underwriters under applicable       
Canadian securities legislation. The credit facility is currently undrawn. The  
Company is in compliance with the terms of the agreement governing the credit   
facility. None of such underwriters nor the Canadian chartered banks affiliated 
with them was involved in the Company's decision to distribute the Notes offered
hereby. Such underwriters, together with Goldman, Sachs & Co., negotiated the   
public offering price of the Notes with the Company.                            

    The Company estimates that its share of the total expenses of the offering
of the Notes, excluding the underwriters' commission, will be approximately $1  
million.                                                                        

The Company has agreed to indemnify the several underwriters against  
certain liabilities, including liabilities under the Securities Act.            

  A prospectus in electronic format may be made available on the web sites
maintained by one or more of the lead managers of this offering and may also be 
made available on web sites maintained by other underwriters. The underwriters  
may agree to allocate a number of Notes to underwriters for sale to their online
brokerage account holders. Internet distributions will be allocated by the lead 
managers to underwriters that may make Internet distributions on the same basis 
as other allocations.                                                           

LEGAL MATTERS 

   The validity of the Notes will be passed upon for us by McCarthy Tetrault
LLP, with respect to matters of Canadian law, and by Fried, Frank, Harris,      
Shriver & Jacobson, a partnership including professional corporations, with     
respect to matters of United States law. Certain legal matters in connection    
with the offering of the Notes will be passed upon for the underwriters by      
Skadden, Arps, Slate, Meagher & Flom LLP, with respect to matters of United     
States law, and by Osler, Hoskin & Harcourt LLP, with respect to matters of     
Canadian law.                                                                   

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EXPERTS 

    The consolidated financial statements and supplemental information -- U.S.
GAAP reconciliation at December 31, 2001 and 2000 and for the two years then    
ended have been incorporated by reference and included in this prospectus and in
the registration statement of which this prospectus forms a part in reliance    
upon the report of KPMG LLP, independent auditors, as stated in their reports   
also incorporated by reference and appearing elsewhere in this prospectus, and  
upon the authority of said firm as experts in accounting and auditing. The      
auditors' report on the supplemental information -- reconciliation with United  
States generally accepted accounting principles includes additional comments for
U.S. readers on changes in accounting principles.                               

DOCUMENTS INCORPORATED BY REFERENCE 

     We file annual and quarterly financial information, material change reports
and other information with the securities commission or similar authority in    
each of the provinces of Canada, or the Commissions. The Commissions allow us to
"incorporate by reference" the information we file with them, which means that  
we can disclose important information to you by referring you to those          
documents. Information that is incorporated by reference is an important part of
this prospectus. We incorporate by reference the documents listed below, which  
were filed with the Commissions under the various securities legislation:       

- Our Annual Information Form dated March 1, 2002.                    

- Our Information Circular dated March 15, 2002 relating to the Annual
 General Meeting of shareholders held on May 23, 2002 (excluding the
sections entitled "Report on Executive Compensation" and "Total   
Shareholder Return Comparison").                                  

  - Our audited annual consolidated financial statements as at and for the
     years ended December 31, 2001 and 2000, together with the notes thereto
and the auditors' report thereon.                                 

     - Our unaudited interim consolidated financial statements as at and for the
three months ended March 31, 2002 and 2001 and the notes thereto. 

- Management's discussion and analysis for the year ended December 31,
2001.                                                             

     - Management's discussion and analysis for the three months ended March 31,
2002 contained in our Interim Report.                             

     Any document of the types referred to in the preceding paragraph (including
material change reports other than confidential material change reports) filed  
by us with the Commissions after the date of this prospectus and prior to the   
termination of this distribution shall be deemed to be incorporated by reference
into this prospectus. The information permitted to be omitted from this         
prospectus will be contained in a supplemented prospectus and will be           
incorporated by reference herein as of the date of such supplemented prospectus.
Any statement contained in this prospectus or in a document incorporated or     
deemed to be incorporated by reference herein shall be deemed to be modified or 
superseded, for purposes of this prospectus, to the extent that a statement     
contained in this prospectus or in any other subsequently filed document which  
also is or is deemed to be incorporated by reference herein modifies or         
supersedes such statement. The modifying or superseding statement need not state
that it has modified or superseded a prior statement or include any other       
information set forth in the document that it modifies or supersedes. The making
of a modifying or superseding statement is not to be deemed an admission for any
purposes that the modified or superseded statement, when made, constituted a    
misrepresentation, an untrue statement of a material fact or an omission to     
state a material fact that is required to be stated or that is necessary to make
a statement not misleading in light of the circumstances in which it was made.  
Any statement so modified or                                                    
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superseded shall not, except as so modified or superseded, be deemed to         
constitute a part of this prospectus.                                           

WHERE YOU CAN FIND MORE INFORMATION 

    We have filed a registration statement on Form F-9 with the Securities and
Exchange Commission, or the Commission with respect to the Notes offered hereby.
This prospectus, which constitutes a part of the registration statement, does   
not contain all of the information in the registration statement or the exhibits
that are a part of such registration statement. For further information about us
and the Notes we are offering, you should review the entire registration        
statement, including the exhibits that were filed as part of the registration   
statement. The registration statement, including the exhibits, may be inspected,
without charge, at the public reference facilities maintained by the Commission 
at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of   
all or any part of the registration statement may be obtained from this office  
after payment at prescribed rates. You will also be able to obtain a free copy  
of the registration statement, including the exhibits, from the Commission's    
website at www.sec.gov.                                                         

     We are subject to certain of the informational requirements of the Exchange
Act, as amended, and in accordance therewith, file reports and other information
with the Commission. Under a multijurisdictional disclosure system, or MJDS,    
adopted by the United States, some reports and other information may be prepared
in accordance with the disclosure requirements of Canada, which requirements are
different from those of the United States. Under MJDS, we are exempt from the   
rules under the Exchange Act prescribing the furnishing and content of proxy    
statements, and our officers, directors and principal shareholders are exempt   
from the reporting and short-swing profit recovery provisions contained in      
Section 16 of the Exchange Act. Our Exchange Act reports and other information  
filed with the Commission may be inspected and copied at the public reference   
facility maintained by the Commission at its location referred to above.        

DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT 

    The following documents have been filed with the Commission as part of the
registration statement of which this prospectus forms a part: our Annual        
Information Form dated March 1, 2002; our Information Circular dated March 15,  
2002 distributed in connection with our annual general meeting held on May 23,  
2002 (excluding the sections entitled "Report on Executive Compensation" and    
"Total Shareholder Return Comparison"); our audited annual consolidated         
financial statements as at and for the years ended December 31, 2001 and 2000;  
our unaudited interim consolidated financial statements as at and for the three 
months ended March 31, 2002 and 2001; Management's discussion and analysis for  
the year ended December 31, 2001; Management's discussion and analysis for the  
three months ended March 31, 2002; earnings coverage calculations as at and for 
the twelve months ended December 31, 2001 and March 31, 2002; consent of KPMG   
LLP; consent of McCarthy Tetrault LLP; powers of attorney; the Indenture; a form
of our officers' certificate in respect of the Notes; a form of second          
supplemental indenture; Statement of Eligibility on Form T-1 of the Trustee for 
the Indenture; and a written irrevocable consent and power of attorney of       
Methanex on Form F-X.                                                           

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                [Download Table]

                                                              PAGE
                                                              ----
                                                                  
ANNUAL CONSOLIDATED FINANCIAL STATEMENTS                          
Auditors' Report............................................   F-2
Consolidated Balance Sheets as at December 31, 2001 and           
  2000......................................................   F-3
Consolidated Statements of Income and Retained Earnings           
  for the years ended December 31, 2001 and 2000............   F-4
Consolidated Statements of Cash Flows for the years ended         
  December 31, 2001 and 2000................................   F-5
Notes to Consolidated Financial Statements for the years          
  ended December 31, 2001 and 2000..........................   F-6
SUPPLEMENTAL INFORMATION -- U.S. GAAP RECONCILIATION              
Auditors' Report............................................  F-18
Supplemental Information -- Reconciliation with U.S. GAAP...  F-19
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS               
Consolidated Balance Sheets as at March 31, 2002 and              
  December 31, 2001.........................................  F-25
Consolidated Statements of Income and Retained Earnings for       
  the three months ended March 31, 2002 and 2001............  F-26
Consolidated Statements of Cash Flows for the three months        
  ended March 31, 2002 and 2001.............................  F-27
Notes to Consolidated Financial Statements for the three          
  months ended March 31, 2002...............................  F-28

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AUDITORS' REPORT TO SHAREHOLDERS

    We have audited the consolidated balance sheets of Methanex Corporation as
at December 31, 2001 and 2000 and the consolidated statements of income and     
retained earnings and cash flows for the years then ended. These financial      
statements are the responsibility of the Company's management. Our              
responsibility is to express an opinion on these financial statements based on  
our audits.                                                                     

We conducted our audits in accordance with Canadian generally accepted
auditing standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of        
material misstatement. An audit includes examining, on a test basis, evidence   
supporting the amounts and disclosures in the financial statements. An audit    
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement       
presentation.                                                                   

    In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at December 31, 
2001 and 2000, the results of its operations and its cash flows for the years   
then ended in accordance with Canadian generally accepted accounting principles.

Vancouver, Canada                                              (signed) KPMG LLP
March 1, 2002                                              Chartered Accountants

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CONSOLIDATED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                                   DECEMBER 31,      
                                                             ------------------------
                                                                2001          2000   
                                                             ----------    ----------
                                                              (THOUSANDS OF DOLLARS) 
                                                                                     
ASSETS                                                                               
Current assets:                                                                      
  Cash and cash equivalents................................. $  332,129    $  225,942
  Receivables (note 3)......................................    135,219       286,756
  Inventories...............................................     99,908       140,175
  Prepaid expenses..........................................      8,685        10,816
                                                             ----------    ----------
                                                                575,941       663,689
Property, plant and equipment (note 4)......................  1,031,716     1,045,899
Other assets (note 6).......................................     85,693        94,124
                                                             ----------    ----------
                                                             $1,693,350    $1,803,712
                                                             ==========    ==========
LIABILITIES AND SHAREHOLDERS' EQUITY                                                 
Current liabilities:                                                                 
  Accounts payable and accrued liabilities.................. $  110,281    $  131,999
  Current maturities on long-term debt and other long-term                           
     liabilities............................................    154,693         5,313
                                                             ----------    ----------
                                                                264,974       137,312
Long-term debt (note 7).....................................    249,535       399,204
Other long-term liabilities (note 8)........................     78,911        79,654
Future income taxes (note 13)...............................    164,469       142,307
Shareholders' equity:                                                                
  Capital stock (note 9)....................................    538,151       660,403
  Retained earnings.........................................    397,310       384,832
                                                             ----------    ----------
                                                                935,461     1,045,235
                                                             ----------    ----------
                                                             $1,693,350    $1,803,712
                                                             ==========    ==========

Approved by the Board:                                                          

                                                                [Download Table]
                                                                

(signed) BRIAN D. GREGSON              (signed) PIERRE CHOQUETTE
        Director                               Director         

See accompanying notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS 

                                                        [Enlarge/Download Table]

                                                                YEARS ENDED DECEMBER 31,   
                                                              ---------------------------- 
                                                                  2001            2000     
                                                              ------------    ------------ 
                                                                 (THOUSANDS OF DOLLARS)    
                                                                                           
Revenue.....................................................  $  1,148,965    $  1,061,271 
Cost of sales and operating expenses........................       910,601         756,248 
Depreciation and amortization...............................       113,719         109,971 
                                                              ------------    ------------ 
Operating income before undernoted items....................       124,645         195,052 
Interest expense............................................       (31,848)        (32,472)
Interest and other income...................................        19,028          16,389 
Asset restructuring charge (note 11)........................       (11,060)             -- 
                                                              ------------    ------------ 
Income before income taxes..................................       100,765         178,969 
Income tax expense (note 13)................................        29,347          34,108 
                                                              ------------    ------------ 
Net income..................................................        71,418         144,861 
Retained earnings, beginning of year........................       384,832         249,553 
Excess of repurchase price over assigned value of common                                   
  shares (note 9)...........................................       (58,940)         (9,582)
                                                              ------------    ------------ 
Retained earnings, end of year..............................  $    397,310    $    384,832 
                                                              ============    ============ 
Weighted average number of common shares outstanding........   154,355,808     170,303,780 
Basic and diluted net income per common share...............  $       0.46    $       0.85 

The number of common shares outstanding at December 31, 2001                               
  was 131,167,942 (December 31, 2000 -- 160,793,216)                                       

See accompanying notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF CASH FLOWS 

                                                        [Enlarge/Download Table]

                                                             YEARS ENDED DECEMBER 31, 
                                                             -------------------------
                                                                2001           2000   
                                                             -----------    ----------
                                                              (THOUSANDS OF DOLLARS)  
                                                                                      
CASH FLOWS FROM OPERATING ACTIVITIES:                                                 
Net income..................................................  $  71,418      $144,861 
Add:                                                                                  
  Depreciation and amortization.............................    113,719       109,971 
  Future income taxes.......................................     22,162        26,407 
  Other.....................................................     12,130        15,354 
                                                              ---------      -------- 
Cash flows from operating activities before undernoted                                
  changes...................................................    219,429       296,593 
Refund of income tax deposit (note 3).......................     66,866            -- 
Receivables and accounts payable and accrued liabilities....     47,958       (31,061)
Inventories and prepaid expenses............................     41,158       (65,495)
Utilization of prepaid natural gas..........................      1,045        15,767 
                                                              ---------      -------- 
                                                                376,456       215,804 

CASH FLOWS FROM FINANCING ACTIVITIES:                                                 
Repayment of other long-term liabilities....................     (6,359)      (10,692)
Repayment of long-term debt assumed on the acquisition of                             
  Saturn Methanol Company, LLC..............................         --        (7,480)
Issue of shares on exercise of incentive stock options......      6,428           663 
Shares repurchased..........................................   (187,620)      (60,987)
                                                              ---------      -------- 
                                                               (187,551)      (78,496)

CASH FLOWS FROM INVESTING ACTIVITIES:                                                 
Plant and equipment under development.......................    (68,460)           -- 
Property, plant and equipment...............................    (22,882)      (19,355)
Accounts payable and accrued liabilities related to capital                           
  expenditures..............................................     12,137        (5,820)
Other assets................................................     (3,513)       (6,407)
Acquisition of Saturn Methanol Company, LLC, net of cash                              
  acquired (note 2).........................................         --       (16,902)
Acquisition of ICI's methanol assets (note 2)...............         --       (14,831)
                                                              ---------      -------- 
                                                                (82,718)      (63,315)
                                                              ---------      -------- 
Increase in cash and cash equivalents.......................    106,187        73,993 
Cash and cash equivalents, beginning of year................    225,942       151,949 
                                                              ---------      -------- 
Cash and cash equivalents, end of year......................  $ 332,129      $225,942 
                                                              =========      ======== 
Supplementary cash flow information:                                                  
  Interest paid, net of capitalized interest................  $  29,919      $ 31,044 
  Income taxes received, net of amounts paid................  $     244      $ 11,943 

See accompanying notes to consolidated financial statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(TABULAR DOLLAR AMOUNTS ARE SHOWN IN THOUSANDS
OF DOLLARS, EXCEPT WHERE NOTED) 
YEARS ENDED DECEMBER 31, 2001 AND 2000

1.  SIGNIFICANT ACCOUNTING POLICIES:                                            

(A) BASIS OF PRESENTATION:                                                  

The consolidated financial statements are prepared in accordance with 
generally accepted accounting principles in Canada and include the accounts of  
Methanex Corporation, its subsidiaries and its proportionate share of joint     
venture revenues, expenses, assets and liabilities. Investments in which the    
Company does not exercise significant influence are accounted for using the cost
method and are included in other assets. All intercompany transactions and      
balances have been eliminated. Preparation of these consolidated financial      
statements requires estimates and assumptions that affect amounts reported and  
disclosed in the financial statements and related notes. Policies requiring     
significant estimates are described below. Actual results could differ from     
those estimates.                                                                

(B) REPORTING CURRENCY:                                                     

   The majority of the Company's business is transacted in U.S. dollars and,
accordingly, the consolidated financial statements have been measured and       
expressed in that currency.                                                     

(C) CASH EQUIVALENTS:                                                       

     Cash equivalents include securities with maturities of three months or less
when purchased.                                                                 

(D) RECEIVABLES:                                                            

The Company provides credit to its customers in the normal course of  
business. The Company performs ongoing credit evaluations of its customers and  
maintains reserves for potential credit losses. Credit losses have been minimal 
and within the range of management's expectations.                              

(E) INVENTORIES:                                                            

Inventories are valued at the lower of cost, determined on a first-in 
first-out basis, and estimated net realizable value.                            

(F) PROPERTY, PLANT AND EQUIPMENT:                                          

Property, plant and equipment are recorded at cost. Financing costs   
incurred during construction are capitalized to the cost of the asset.          
Depreciation is provided on a straight-line basis, and, in the case of the New  
Zealand assets, on a unit-of-natural-gas consumption basis, from the            
commencement of commercial operations to amortize the cost of the assets over   
their estimated useful lives.                                                   

     The Company reviews the carrying value of property, plant and equipment for
impairment whenever events and circumstances indicate that the carrying value of
an asset may not be recoverable from the estimated future cash flows expected to
result from its use and eventual disposition. In cases where undiscounted       
expected future cash flows are less than the carrying value, a write-down is    
recognized equal to the difference.                                             

  Production from the Company's New Zealand operations is dependent on the
supply of natural gas from the Maui field. The current contractual natural gas  
entitlements are sufficient to operate the New Zealand plants at capacity for   
the equivalent of approximately three years.                                    
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1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):                                

During 2001, the owners of the Maui field announced that the Maui reserves may  
be materially less than previously estimated and below the aggregate of contract
quantities. This could potentially reduce the amount of contracted natural gas  
available to Methanex. The process to determine the available reserves in the   
Maui field is expected to be completed by the end of 2002. The Company is       
continuing to pursue acquisitions of additional natural gas to supply its New   
Zealand plants. However, there can be no assurance that it will be able to      
secure additional natural gas in New Zealand at commercially acceptable terms.  

Routine repairs and maintenance costs are charged against current     
operations. At intervals of three or more years, the Company conducts a shutdown
and inspection (turnaround) at its plants to perform necessary repairs and      
replacements of catalyst. Costs associated with these shutdowns are amortized   
over the period until the next planned turnaround.                              

    Obligations for future removal and site restoration costs are provided for
on a straight-line basis, and, in the case of the New Zealand assets, on a      
unit-of-natural-gas consumption basis over the estimated useful lives of the    
assets when a reasonably definitive estimate of the costs can be made.          

(G) OTHER ASSETS:                                                           

Other assets are recorded at cost. Amortization is provided for other 
assets, except long-term investments, on an appropriate basis to charge the cost
of the assets against earnings as used.                                         

(H) EMPLOYEE FUTURE BENEFITS:                                               

Accrued pension benefit obligations and related expenses for defined  
benefit pension plans are determined using current market bond yields to measure
the accrued pension benefit obligation. Adjustments arising from plan           
amendments, experience gains and losses and changes in assumptions are amortized
on a straight-line basis over the estimated average remaining service lifetime  
of the employee group. Gains or losses arising from plan curtailments and       
settlements are recognized in the year in which they occur.                     

  The cost for defined contribution benefit plans is expensed as earned by
the employees.                                                                  

(I) NET INCOME PER SHARE:                                                   

Effective January 1, 2001, the Company has adopted the new Canadian   
Institute of Chartered Accountants recommendations relating to the calculation  
and disclosure of net income per share. The new recommendations have been       
applied retroactively and the comparative consolidated financial statements have
been restated to reflect this change. Under the revised policy, the calculation 
of basic net income per share has not been impacted. Under the new              
recommendations the treasury stock method is used for the calculation of diluted
net income per share instead of the imputed net income approach used previously.
Under the treasury stock method, the weighted average number of common shares   
outstanding for the calculation of diluted net income per share assumes that the
proceeds to be received on the exercise of stock options are applied to         
repurchase common shares at the average market price for the period. The impact 
of the retroactive application of the new policy on disclosed net income per    
share was to increase diluted net income per share for 2000 by $0.02. Stock     
options to purchase common shares are dilutive only when the average market     
price of the common shares during the period exceeds the exercise price of the  
options.                                                                        

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):                                

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

                                                        [Enlarge/Download Table]

                                                                2001         2000    
                                                             -----------  -----------
                                                                                     
Denominator for basic net income per share.................. 154,355,808  170,303,780
Effect of dilutive stock options............................   1,609,485      747,813
                                                             -----------  -----------
Denominator for diluted net income per share................ 155,965,293  171,051,593
                                                             ===========  ===========

(J) STOCK OPTION PLAN:                                                      

The Company has a stock option plan that is described in note 10. No  
compensation expense is recognized when stock options are granted because the   
Company grants stock options with an exercise price based on the market price at
the date of the grant. Any consideration paid on the exercise of stock options  
is credited to share capital.                                                   

(K) DEFERRED SHARE UNITS:                                                   

   Directors and executive officers of the Company may elect to receive some
elements of their compensation in the form of notional grants of Deferred Share 
Units (Units). The number of Units allotted is determined by the amount of      
compensation elected to be invested in the Units divided by the market value of 
the Company's common shares at the time the compensation is earned. These Units 
are redeemable for cash based on the market value of the Company's common shares
at the time the Unit holder ceases to be a director or executive officer of the 
Company. The amounts invested in the Units and changes in the fair value of the 
Units are included in earnings.                                                 

(L) REVENUE RECOGNITION:                                                    

    Revenue is generally recognized as risk and title to the product transfers
to the customer, which usually occurs at the time shipment is made.             

(M) FOREIGN CURRENCY TRANSLATION:                                           

   The Company translates foreign currency denominated monetary items at the
rates of exchange prevailing at the balance sheet dates and revenues and        
expenditures at average rates of exchange during the year. Foreign exchange     
gains or losses are included in earnings.                                       

(N) FINANCIAL INSTRUMENTS:                                                  

The Company uses various derivative financial instruments to hedge its
operating exposures to fluctuations in foreign exchange rates and natural gas   
costs. The gains and losses on these financial instruments are included in the  
measurement of the related hedged transaction when realized.                    

Premiums paid or received with respect to financial instruments are   
deferred and amortized to income over the effective period of the contracts.    

(O) INCOME TAXES:                                                           

     Future income taxes are accounted for using the asset and liability method.
The asset and liability method requires that income taxes reflect the expected  
future tax consequences of temporary differences between the carrying amounts of
assets and liabilities and their tax bases. Future income tax assets and        
liabilities are determined for each temporary difference based on               

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

1.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):                                

the tax rates which are expected to be in effect when the underlying items of   
income and expense are expected to be realized. The effect of a change in tax   
rates is recognized in the period of substantive enactment. Future tax benefits,
such as non-capital loss carryforwards, are recognized to the extent that       
realization of such benefits is considered more likely than not.                

The Company does not accrue for taxes that will be incurred upon      
distributions from its subsidiaries unless it is probable that the earnings will
be repatriated.                                                                 

2.  BUSINESS COMBINATIONS:                                                      

(A) ACQUISITION OF SATURN METHANOL COMPANY:                                 

    On September 22, 2000, the Company acquired 100 percent of Saturn Methanol
Company, LLC. The acquisition has been accounted for under the purchase method  
of accounting with its results of operations consolidated from the date of      
acquisition. The Company's interest in the net assets acquired at fair values   
was as follows:                                                                 

                                                                [Download Table]
                                                                      
Net assets acquired:                                                  
Marketing rights............................................  $25,533 
10% interest in Titan methanol facility.....................    9,500 
Long-term debt..............................................   (7,480)
Cash........................................................      947 
Working capital and other...................................     (653)
                                                              ------- 
Net assets acquired.........................................  $27,847 
                                                              ======= 
Consideration, including costs on acquisition:                        
Cash........................................................  $17,849 
Other long-term liabilities.................................    9,998 
                                                              ------- 
                                                              $27,847 
                                                              ======= 

(B) ACQUISITION OF ICI METHANOL ASSETS:                                     

     On December 31, 2000, the Company acquired certain methanol assets from ICI
Chemicals and Polymers Limited (ICI). The assets are located primarily in the   
United Kingdom and include marketing rights, a loading terminal, terminal leases
and pipelines to customers. ICI retained ownership of its 500,000 tonne per year
methanol plant and closed the plant at the end of April 2001.                   

 The cost of the fixed and intangible assets acquired was $14.8 million.

  The Company also purchased ICI's methanol inventory for approximately $7
million.                                                                        

3.  RECEIVABLES:                                                                

                                                                [Download Table]

                                                               2001      2000  
                                                             --------  --------
                                                                               
Trade....................................................... $101,653  $185,966
Income taxes receivable (a).................................    6,129    66,551
Other.......................................................   27,437    34,239
                                                             --------  --------
                                                             $135,219  $286,756
                                                             ========  ========

(a) During 2001, the Company received a refund of $67 million from the
Canada Customs and Revenue Agency representing the full amount placed on deposit
plus accrued interest relating to the successful settlement of the 1991 income  
tax reassessment.                                                               

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4.  PROPERTY, PLANT AND EQUIPMENT:                                              

                                                        [Enlarge/Download Table]

                                                                ACCUMULATED    NET BOOK 
                                                       COST     DEPRECIATION    VALUE   
                                                    ----------  ------------  ----------
                                                                                        
2001                                                                                    
Plants............................................. $2,121,525   $1,179,372   $  942,153
Plant and equipment under development..............     68,460           --       68,460
Other..............................................     37,581       16,478       21,103
                                                    ----------   ----------   ----------
                                                    $2,227,566   $1,195,850   $1,031,716
                                                    ==========   ==========   ==========
2000                                                                                    
Plants............................................. $2,114,503   $1,089,215   $1,025,288
Other..............................................     32,950       12,339       20,611
                                                    ----------   ----------   ----------
                                                    $2,147,453   $1,101,554   $1,045,899
                                                    ==========   ==========   ==========

During 2001, $1.0 million of interest was capitalized to plant and    
equipment under development.                                                    

5.  INTEREST IN JOINT VENTURE:                                                  

 The Company has a 63.1 percent joint venture interest in Atlas Methanol
Company ("Atlas"). The joint venture is constructing a 1.7 million tonne per    
year methanol plant in Trinidad. Construction is expected to be completed by the
end of 2003.                                                                    

   The consolidated financial statements as at December 31, 2001 include the
following amounts representing the Company's interest in the Atlas joint        
venture:                                                                        

                                                                [Download Table]
                                                                     
Consolidated Balance Sheet                                           
  Current assets............................................  $ 1,955
  Property, plant and equipment.............................   63,131
  Current liabilities.......................................    7,690
Consolidated Statement of Cash Flows                                 
  Cash outflows from investing activities...................   55,441

For 2001, the joint venture has no revenue and all expenditures were  
capitalized to plant and equipment under development.                           

6.  OTHER ASSETS:                                                               

                                                                [Download Table]

                                                               2001       2000  
                                                              -------    -------
                                                                                
Marketing rights:                                                               
  North America.............................................  $ 9,922    $13,209
  Caribbean.................................................   22,638     25,949
  Europe....................................................    9,341     10,331
                                                              -------    -------
                                                               41,901     49,489
                                                              -------    -------
Natural gas prepayments.....................................   12,498     13,543
Investment in Titan Methanol Company, at cost (note 2(a))...    9,500      9,500
Investment in Cellex Power Products, at cost................    3,842         --
Foreign currency options....................................    3,806      7,625
Other.......................................................   14,146     13,967
                                                              -------    -------
                                                              $85,693    $94,124
                                                              =======    =======

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

7.  LONG-TERM DEBT:                                                             

                                                                [Download Table]

                                                               2001        2000  
                                                             ---------   --------
                                                                                 
7.40% unsecured notes due August 15, 2002 (effective yield                       
  7.49%).................................................... $ 149,909   $149,831
7.75% unsecured notes due August 15, 2005 (effective yield                       
  7.83%)....................................................   249,535    249,373
                                                             ---------   --------
                                                               399,444    399,204
Less current maturities.....................................  (149,909)        --
                                                             ---------   --------
                                                             $ 249,535   $399,204
                                                             =========   ========

The Company has available an unsecured revolving bank facility of $291
million. This facility ranks pari passu with the unsecured notes.               

8.  OTHER LONG-TERM LIABILITIES:                                                

                                                                [Download Table]

                                                              2001      2000   
                                                             -------   ------- 
                                                                               
Site restoration (a)........................................ $55,851   $51,782 
Fortier asset restructuring (b).............................   7,455    10,145 
Saturn acquisition (c)......................................   7,329     9,998 
Other.......................................................  13,060    13,042 
                                                             -------   ------- 
                                                              83,695    84,967 
Less current maturities.....................................  (4,784)   (5,313)
                                                             -------   ------- 
                                                             $78,911   $79,654 
                                                             =======   ======= 

(A) SITE RESTORATION:                                                       

  The Company has accrued $55.9 million for obligations for future removal
and site restoration costs for those sites where a reasonably definitive        
estimate of the costs can be made. There were no cash expenditures in 2001 or   
2000 relating to site restoration costs and there are approximately $3 million  
of cash expenditures expected for 2002. Because of uncertainties related to     
estimating future removal and site restoration activities, future costs related 
to the currently identified sites could differ from the amounts estimated. In   
the event that the costs are in excess of amounts estimated, management does not
anticipate that they will have a material adverse effect on the consolidated    
financial position of the Company.                                              

(B) FORTIER ASSET RESTRUCTURING:                                            

The amounts are payable over a three-year period to February 2004 and 
relate to the 1999 Fortier restructuring.                                       

(C) SATURN ACQUISITION:                                                     

     During 2000, the Company acquired Saturn Methanol Company, LLC (note 2(a)).
A portion of the consideration for the acquisition is payable over a three-year 
period to September 2004.                                                       

9.  CAPITAL STOCK:                                                              

(a) The authorized share capital of the Company is comprised as follows:        
25,000,000 preferred shares without nominal or par value; and           
Unlimited number of common shares without nominal or par value.         

(b) Under covenants set out in certain debt instruments, the Company can pay    
 cash dividends or make other shareholder distributions to the extent that
shareholders' equity is equal to or greater than $850 million.          

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9.  CAPITAL STOCK (CONTINUED):                                                  

(c) Changes in the capital stock of the Company during the period January 1,    
2000 to December 31, 2001 were as follows:                              

                                                        [Enlarge/Download Table]

                                                              NUMBER OF                 
                                                            COMMON SHARES  CONSIDERATION
                                                            -------------  -------------
                                                                                        
Balance, December 31, 1999.................................  173,136,748     $ 711,145  
Issued on exercise of incentive stock options..............      172,000           663  
Shares repurchased.........................................  (12,515,532)      (51,405) 
                                                             -----------     ---------  
Balance, December 31, 2000.................................  160,793,216       660,403  
Issued on exercise of incentive stock options..............    1,739,675         6,428  
Shares repurchased.........................................  (31,364,949)     (128,680) 
                                                             -----------     ---------  
Balance, December 31, 2001.................................  131,167,942     $ 538,151  
                                                             ===========     =========  

During 2000 and 2001, the Company repurchased for cancellation, common
shares at prices in excess of their assigned value. The cost to acquire the     
shares in the amount of $187.6 million (2000 -- $61.0 million) is allocated     
$128.7 million (2000 -- $51.4 million) to capital stock and $58.9 million       
(2000 -- $9.6 million) to retained earnings.                                    

10.  STOCK OPTION PLAN:                                                         

There are two types of options granted under the plan: incentive stock
options and performance stock options. At December 31, 2001, the Company had 4.3
million common shares reserved for future stock option grants to its directors  
and employees under the Company's stock option plan.                            

(A) INCENTIVE STOCK OPTIONS:                                                

  The exercise price of each incentive stock option is equal to the quoted
market price of the Company's common shares at the date of the grant. An        
option's maximum term is ten years; one-half of the options vest one year after 
the date of the grant, with a further vesting of one-quarter of the options per 
year over the subsequent two years. Common shares reserved for incentive stock  
options at December 31, 2001 and 2000 are as follows (exercise price per share  
in Canadian dollars):                                                           

                                                        [Enlarge/Download Table]

                                                                               WEIGHTED   
                                                               NUMBER OF       AVERAGE    
                                                             STOCK OPTIONS  EXERCISE PRICE
                                                             -------------  --------------
                                                                                          
Outstanding at December 31, 1999............................   6,673,625        $11.08    
Granted.....................................................   1,945,000          3.31    
Exercised...................................................    (172,000)         5.73    
Cancelled...................................................    (398,100)         7.05    
                                                              ----------        ------    
Outstanding at December 31, 2000............................   8,048,525          9.52    
Granted.....................................................   2,963,900          9.56    
Exercised...................................................  (1,739,675)         5.72    
Cancelled...................................................    (582,000)        12.48    
                                                              ----------        ------    
Outstanding at December 31, 2001............................   8,690,750        $10.09    
                                                              ==========        ======    

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

10.  STOCK OPTION PLAN (CONTINUED):                                             

                                                        [Enlarge/Download Table]

                                 STOCK OPTIONS OUTSTANDING         STOCK OPTIONS EXERCISABLE     
                                    AT DECEMBER 31, 2001             AT DECEMBER 31, 2001        
                                ----------------------------  -----------------------------------
                                                  WEIGHTED                                       
                                                   AVERAGE    WEIGHTED      NUMBER       WEIGHTED
                                  NUMBER OF       REMAINING   AVERAGE      OF STOCK      AVERAGE 
                                STOCK OPTIONS    CONTRACTUAL  EXERCISE      OPTIONS      EXERCISE
RANGE OF EXERCISE PRICES         OUTSTANDING        LIFE       PRICE      EXERCISABLE     PRICE  
------------------------        -------------    -----------  --------    -----------    --------
                                                                                                 
$ 2.93 to 5.30.................   1,047,100          8.2       $ 3.34        532,050      $ 3.35 
$ 5.85 to 8.75.................     504,225          6.0         6.29        403,519        6.40 
$ 9.56 to 14.63................   6,939,425          6.1        10.99      3,996,525       12.05 
$23.75.........................     200,000          2.8        23.75        200,000       23.75 
                                  ---------          ---       ------      ---------      ------ 
                                  8,690,750          6.3       $10.09      5,132,094      $11.16 
                                  =========          ===       ======      =========      ====== 

As of December 31, 2000, 5,534,900 stock options were exercisable at a
weighted average exercise price of $11.77.                                      

(B) PERFORMANCE STOCK OPTIONS:                                              

 During 1999, the Company granted 2,600,000 performance stock options to
certain key employees. The exercise price of the options is Canadian $4.47 per  
common share which was the quoted market value at the date of the grant. The    
options cannot be exercised prior to October 1, 2002. The vesting of the options
is tied to the market value of the Company's common shares subsequent to the    
date of the grant. One-third of the options vest after September 30, 2002 if the
common shares have traded at or above Canadian $10 per share subsequent to the  
date of the grant; a further one-third vest if the common shares have traded at 
or above Canadian $15 per share subsequent to the date of the grant and the     
options are fully vested if the common shares have traded at or above Canadian  
$20 per share subsequent to the date of the grant. These options expire         
September 9, 2009.                                                              

   During 2001, 75,000 (2000 -- 400,000) of these options were cancelled and
at December 31, 2001, 2,125,000 (2000 -- 2,200,000) of these options remain     
outstanding. As at December 31, 2001, 699,000 (2000 -- nil) of the outstanding  
performance stock options will vest and be exercisable after September 30, 2002.

11.  ASSET RESTRUCTURING CHARGE:                                                

During 2001, the Company recorded an asset restructuring charge of $11
million primarily for employee severance and mothball costs relating to the     
shutdown of the Medicine Hat, Alberta facility for an indeterminate period.     

12.  SEGMENTED INFORMATION:                                                     

  The Company's operations consist of the production and sale of methanol,
which constitutes a single operating segment.                                   

    Revenues attributed to geographic regions, based on location of customers,
are as follows:                                                                 

                                                        [Enlarge/Download Table]

                                         UNITED              OTHER               LATIN             
                               CANADA    STATES    JAPAN      ASIA     EUROPE   AMERICA    TOTAL   
                               -------  --------  --------  --------  --------  -------  ----------
                                                                                                   
Revenue                                                                                            
2001.......................... $70,855  $375,061  $139,405  $219,722  $261,677  $82,245  $1,148,965
2000..........................  59,684   328,399   161,412   224,613   196,233  90,930    1,061,271

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

12.  SEGMENTED INFORMATION (CONTINUED):                                         

   Net book value of property, plant and equipment by country is as follows:

                                                        [Enlarge/Download Table]

                                         UNITED     NEW                TRINIDAD                     
                               CANADA    STATES   ZEALAND    CHILE     & TOBAGO   OTHER     TOTAL   
                               -------  --------  --------  --------  ----------  ------  ----------
                                                                                                    
Property, plant and equipment                                                                       
2001.......................... $79,531  $115,516  $136,931  $629,765   $63,131    $6,842  $1,031,716
2000..........................  91,368   124,867   171,861   652,889        --     4,914   1,045,899

13.  INCOME AND OTHER TAXES:                                                    

   (a) Income tax expense differs from the amounts that would be obtained by
applying the Canadian statutory income tax rate to the respective year's income 
before taxes. These differences are as follows:                                 

                                                                [Download Table]

                                                                2001       2000   
                                                              --------   -------- 
                                                                                  
Canadian statutory tax rate.................................       45%        45% 
Computed "expected" tax expense.............................  $ 45,344   $ 80,206 
Increase (decrease) in tax resulting from:                                        
  Income taxed in foreign jurisdictions.....................   (59,090)   (54,456)
  Losses not tax-effected...................................    50,285     34,672 
  Benefits of previously unrecognized loss carryforwards and                      
     temporary differences..................................   (12,020)   (35,489)
  Non-deductible costs......................................     4,328      8,670 
  Large corporation tax.....................................       500        505 
                                                              --------   -------- 
Total income tax expense....................................  $ 29,347   $ 34,108 
                                                              ========   ======== 
Income tax expense is represented by:                                             
  Current income tax........................................  $  7,185   $  7,701 
  Future income tax.........................................    22,162     26,407 
                                                              --------   -------- 
                                                              $ 29,347   $ 34,108 
                                                              ========   ======== 

   (b) The tax effect of temporary differences that give rise to significant
portions of the future tax assets and future tax liabilities are presented      
below:                                                                          

                                                                [Download Table]

                                                               2001        2000    
                                                             ---------   --------- 
                                                                                   
Future tax liabilities                                                             
  Property, plant and equipment............................. $ 204,729   $ 205,086 
  Other.....................................................    22,420      27,488 
                                                             ---------   --------- 
                                                               227,149     232,574 
Future tax assets                                                                  
  Non-capital loss carryforwards............................   141,967     126,936 
  Property, plant and equipment.............................    14,262      13,737 
  Other.....................................................    28,485      53,311 
                                                             ---------   --------- 
                                                               184,714     193,984 
Future tax asset valuation allowance........................  (122,034)   (103,717)
                                                             ---------   --------- 
                                                                62,680      90,267 
                                                             ---------   --------- 
Net future income tax liability............................. $ 164,469   $ 142,307 
                                                             =========   ========= 

  (c) At December 31, 2001, the Company had non-capital loss carryforwards
available for tax purposes of $312 million in Canada and the United States and  
$69 million in New Zealand. In Canada and the United States these loss          
carryforwards expire between 2006 and 2021. In New Zealand the loss             
carryforwards do not have an expiry date.                                       

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14.  DERIVATIVES:                                                               

(A) FOREIGN EXCHANGE RISK MANAGEMENT:                                       

A substantial portion of the Company's business is transacted in its  
reporting currency, the U.S. dollar. At the Company's Canadian, New Zealand and 
Chilean production facilities, certain of the underlying operating costs and    
capital expenditures are incurred in local currencies. The Company uses         
derivative financial instruments to reduce its foreign exchange exposure on     
certain committed and anticipated costs related to these operations. In         
addition, certain revenues in Europe are realized in the Euro and the Great     
Britain pound. The Company has hedged certain of these exposures by entering    
into forward exchange contracts and currency options to contribute to achieving 
cost structure and revenue targets. The following table summarizes the Company's
forward exchange contracts and currency options in Euro (EUR), Great Britain    
pound (GBP), New Zealand dollars (NZD), Canadian dollars (CAD), Australian      
dollars (AUD) and Chilean pesos (CLP) at December 31, 2001:                     

                                                        [Enlarge/Download Table]

                                                                     AVERAGE            
                                                      NOTIONAL       EXCHANGE           
                                                       AMOUNT          RATE    MATURITY 
                                                  -----------------  --------  ---------
                                                                                        
1.  Purchase Contracts:                                                                 
Average rate forward exchange contracts.......... NZD   108 million  $0.6579        2002
Synthetic forward exchange contracts(1).......... NZD    93 million  $0.5817        2002
Average rate forward exchange contracts.......... NZD   370 million  $0.4956   2003-2004
Average rate forward exchange contracts.......... CAD    80 million  $0.7428        2002
Average rate forward exchange contracts.......... CAD   100 million  $0.6714        2003
Average rate option cap arrangements............. CAD    21 million  $0.7299        2002
Average rate forward exchange contracts.......... AUD     2 million  $0.5045        2002
Inflation-linked forward exchange contracts...... CLP     8 billion  $0.0014        2002
2.  Sales Contracts:                                                                    
Forward exchange contracts....................... EUR    28 million  $0.8890        2002
Forward exchange contracts....................... GBP     2 million  $1.4521        2002

---------------                                                                 

(1) The synthetic forward exchange contract represents a series of NZD put and  
call options having identical strike prices and expiry dates.           

(B) NATURAL GAS RISK MANAGEMENT:                                            

     From time to time the Company uses natural gas financial instruments to fix
the price of a portion of its natural gas exposures. Natural gas financial      
instruments mature on various dates to December 2002. The fair value at December
31, 2001 was $3.9 million (2000 -- negative $16.1 million).                     

15.  FAIR VALUE DISCLOSURES:                                                    

The carrying value and fair value of the financial instruments are as 
follows:                                                                        

                                                        [Enlarge/Download Table]

                                                  2001                     2000          
                                         ----------------------   ---------------------- 
                                         CARRYING       FAIR      CARRYING       FAIR    
                                           VALUE        VALUE       VALUE        VALUE   
                                         ---------    ---------   ---------    --------- 
                                                                                         
Long-term debt.......................... $(399,444)   $(392,000)  $(399,204)   $(395,000)
Derivative financial instruments:                                                        
Forward exchange contracts.............. $      --    $ (84,453)  $      --    $(100,055)
Foreign currency options................ $   3,806    $      --   $   7,625    $     108 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

15.  FAIR VALUE DISCLOSURES (CONTINUED):                                        

     Included in the fair value of the derivative financial instruments referred
to in the table above were unrealized losses of $42.7 million (2000 -- $39.3    
million) related to forward exchange contracts and foreign exchange options that
hedge anticipated Canadian, New Zealand and Chilean operating costs for which   
there is not a contractual agreement in place.                                  

     The fair value of the Company's long-term debt is estimated by reference to
current market prices for other debt securities with similar terms and          
characteristics. The fair value of the Company's forward exchange contracts,    
currency options and natural gas financial instruments is determined based on   
quoted market prices received from counterparties. Until settled, the fair value
of the derivative financial instruments will fluctuate based on changes in      
foreign exchange rates. The gains and losses on these financial instruments are 
deferred and included in the measurement of the related hedged transaction (see 
note 14).                                                                       

The carrying values of cash and cash equivalents, trade receivables,  
accounts payable and accrued liabilities, and other long-term liabilities       
meeting the definition of a financial instrument approximate their fair value.  

The Company is exposed to credit-related losses in the event of       
non-performance by counterparties to derivative financial instruments but does  
not expect any counterparties to fail to meet their obligations. The Company    
deals with only highly rated counterparties, normally major financial           
institutions. The Company is exposed to credit risk when there is a positive    
fair value of derivative financial instruments at a reporting date. The maximum 
amount that would be at risk if the counterparties failed completely to perform 
under the contracts was $4.8 million at December 31, 2001 (2000 -- $1.2         
million).                                                                       

16.  RETIREMENT PLANS:                                                          

 The Company has non-contributory defined benefit pension plans covering
certain employees. At December 31, 2001, the estimated present value of accrued 
pension benefits was $16.0 million (2000 -- $14.7 million) and the market value 
of the plan's assets was $13.5 million (2000 -- $15.4 million). The Company also
has defined contribution pension plans.                                         

     Total pension costs charged to operations during the year were $6.0 million
(2000 -- $6.2 million).                                                         

17.  COMMITMENTS:                                                               

 (a) The Company has commitments under take-or-pay contracts to purchase
annual quantities of feedstock supplies including those related to the Atlas    
facility and to pay for transportation capacity related to these supplies. The  
minimum estimated commitment under these contracts for the next five years is as
follows:                                                                        

                                                                [Download Table]
                                                                      
2002........................................................  $158,978
2003........................................................  $142,492
2004........................................................  $165,927
2005........................................................  $161,011
2006........................................................  $146,613

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

17.  COMMITMENTS (CONTINUED):                                                   

  (b) The Company has future minimum lease payments under operating leases
relating primarily to vessel charter, terminal facilities, office space and     
equipment for the next five years as follows:                                   

                                                                [Download Table]
                                                                      
2002........................................................  $101,997
2003........................................................  $ 88,860
2004........................................................  $ 76,980
2005........................................................  $ 76,291
2006........................................................  $ 73,579

    (c) The Company has commitments to market, for a fee, methanol produced by
another methanol producer and the Atlas joint venture through to 2009 and 2018, 
respectively.                                                                   

(d) The Company estimates that its share of capital expenditures to   
complete the construction of the Atlas methanol facility in Trinidad will be    
$200 million and will be incurred over the next two years. The Company expects  
that these expenditures will be funded from project financing, cash generated   
from operations and cash and cash equivalents. The Company's total equity       
contribution to the joint venture is expected to be approximately $100 million. 
At December 31, 2001, the Company estimates its future cash equity contribution 
to the project will be approximately $60 million.                               

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REPORT OF INDEPENDENT ACCOUNTANTS 

To the Board of Directors and Shareholders                                      
of Methanex Corporation                                                         

     Under date of March 1, 2002, we reported on the consolidated balance sheets
of Methanex Corporation (the "Company") as of December 31, 2001 and 2000, and   
the related consolidated statements of income and retained earnings and cash    
flows for the years then ended, which are included elsewhere in this prospectus.
In connection with our audits of the aforementioned consolidated financial      
statements, we also have audited the related supplemental information entitled  
"Reconciliation With United States Generally Accepted Accounting Principles".   
This supplemental information is the responsibility of the Company's management.
Our responsibility is to express an opinion on this supplementary information   
based on our audits.                                                            

    In our opinion, such supplemental information, when considered in relation
to the basic consolidated financial statements taken as a whole, presents       
fairly, in all material respects, the information set forth therein.            

Vancouver, Canada                                              (signed) KPMG LLP
March 1, 2002                                              Chartered Accountants

COMMENTS BY AUDITOR FOR U.S. READERS ON CANADA - U.S. REPORTING DIFFERENCE

     In the United States, reporting standards for auditors require the addition
of an explanatory paragraph (following the opinion paragraph) when there is a   
change in accounting principles that has a material effect on the comparability 
of the Company's consolidated financial statements, such as the changes         
described in note 1 to the consolidated financial statements and note (d) of the
supplemental information "Reconciliation with United States Generally Accepted  
Accounting Principles". Our reports to the board of directors and shareholders  
each dated March 1, 2002 are expressed in accordance with Canadian reporting    
standards which do not require a reference to such changes in accounting        
principles in the auditors' report when the changes are properly accounted for  
and adequately disclosed in the financial statements.                           

Vancouver, Canada                                              (signed) KPMG LLP
March 1, 2002                                              Chartered Accountants

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SUPPLEMENTAL INFORMATION
RECONCILIATION WITH UNITED STATES 
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) 

    Methanex Corporation (the "Company") follows generally accepted accounting
principles in Canada ("Canadian GAAP") which are different in some respects from
those applicable in the United States and from practices prescribed by the      
United States Securities and Exchange Commission ("U.S. GAAP"). The significant 
differences between Canadian GAAP and U.S. GAAP with respect to the Company's   
consolidated financial statements are as follows:                               

(A) INCOME TAX ACCOUNTING:                                                      

  The income tax differences identified in note (h) include the income tax
   effect of other differences between Canadian GAAP and U.S. GAAP described
below.                                                                

(B) BUSINESS COMBINATION:                                                       

Effective January 1, 1993, the Company combined its business with a   
  methanol business located in New Zealand and Chile. Under Canadian GAAP,
  the business combination was accounted for using the pooling-of-interest
     method. Under U.S. GAAP, the business combination would have been accounted
for as a purchase with the Company identified as the acquirer.        

 For U.S. GAAP purposes, property, plant and equipment would increase by
$110.4 million for the year ended December 31, 2001 (2000 -- $133.8   
 million), which represents the adjustments, net of depreciation, to the
     reported net book values to record the business combination described above
as a purchase.                                                        

(C) INTEREST IN JOINT VENTURE:                                                  

  U.S. GAAP requires interests in joint ventures to be accounted for using
the equity method, whereas Canadian GAAP requires proportionate       
  consolidation of interests in joint ventures. The impact of applying the
    equity method of accounting does not result in any change to net income or
    shareholders' equity and as such the Company has not made an adjustment in
this reconciliation for this difference in accounting principles. This
  departure from U.S. GAAP is acceptable for foreign private issuers under
the practices prescribed by the United States Securities and Exchange 
Commission. A summary balance sheet and cash flow statement for the   
interest in the joint venture is provided in note 5 to the Company's  
consolidated financial statements.                                    

(D) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES:                              

     On January 1, 2001, the Company adopted FAS 133, "Accounting for Derivative
 Instruments and Hedging Activities", as amended by FAS 137 and FAS 138,
     (collectively referred to as FAS 133) for U.S. GAAP and accordingly applied
   the standard prospectively. FAS 133 provides comprehensive and consistent
  standards for the recognition and measurement of derivatives and hedging
activities. Prior to the adoption of FAS 133, for U.S. GAAP purposes  
     unrealized gains or losses on foreign currency forward and option contracts
to hedge anticipated transactions were recognized in earnings and     
     unrealized gains or losses on foreign currency forward and option contracts
    to hedge firmly committed transactions were included in the measurement of
the related transaction when realized.                                

 FAS 133 requires all derivatives to be recorded on the balance sheet at
    fair value and establishes new accounting requirements for different types
     of hedging activities; fair value or cash flow. Cash flow hedges are hedges
of the variability of cash flows and fair value hedges are hedges of  
   changes in fair value. For cash flow hedges, the effective portion of the
gain or loss on the derivative instrument is reported initially as a  
component of other                                                    
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SUPPLEMENTAL INFORMATION
RECONCILIATION WITH UNITED STATES 
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES -- (CONTINUED) 

(TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) 

(D) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (CONTINUED):                  

   comprehensive income and subsequently reclassified into earnings when the
     forecasted transaction occurs. For fair value hedges, at each balance sheet
     date the effective portion of the gain or loss on the derivative instrument
     is recognized in net income together with the corresponding gain or loss on
     the hedged item attributable to the risk being hedged. Any amounts excluded
from the assessment of hedge effectiveness as well as any ineffective 
   portion of a derivative's change in fair value are immediately recognized
in net income.                                                        

Upon adoption, the Company identified and documented all outstanding  
   derivative instruments as either fair value or cash flow hedges under FAS
   133. As indicated above, certain of these instruments had previously been
  accounted for as hedges and others, related to anticipated transactions,
 had been marked-to-market through income. Upon adoption of FAS 133, all
  derivative instruments were recorded on the balance sheet at fair value.
     The difference between a derivative's carrying amount prior to the adoption
of FAS 133 and its fair value at the date of adoption is reported as a
cumulative effect of accounting change either in net income or other  
   comprehensive income. For instruments previously identified as fair value
    hedges, the cumulative effect of accounting change is reported through net
   income. For instruments previously accounted for as cash flow hedges, the
cumulative effect of accounting change is reported through other      
comprehensive income.                                                 

     Upon adoption of FAS 133 on January 1, 2001, the Company recorded a loss of
$1.0 million in net income and a loss of $16.1 million, net of related
  income tax of $6.4 million, in other comprehensive loss representing the
cumulative effect of the accounting change.                           

     For the year ended December 31, 2001, the Company recorded a net adjustment
     to increase income before taxes by $18.9 million (2000 -- decrease by $32.2
  million), which represents the difference between Canadian and U.S. GAAP
for accounting for derivative instruments.                            

(E) STOCK COMPENSATION:                                                         

For U.S. GAAP purposes, the Company has elected under Statement of    
Financial Accounting Standards No. 123, "Accounting for Stock Based   
    Compensation" to continue to apply the provisions of Accounting Principles
 Board Opinion 25 to its accounting for stock compensation to employees.
     Under APB 25, compensation is measured based on the intrinsic value method.
    Under the intrinsic value method, compensation expense is recorded for the
  excess on the measurement date of the market price of the stock over the
    exercise price of the stock option. The measurement date is the first date
    on which both the number of shares the employee is entitled to receive and
 the exercise price are known. If the measurement date is later than the
date of grant then the plan is termed a variable plan and compensation
   expense is measured as the amount by which the quoted market price of the
   Company's common shares exceeds the exercise price of the stock option at
 each reporting date until the measurement date. Compensation expense is
recognized ratably over the vesting period.                           

    (i)  Incentive stock options -- The Company grants incentive stock options
       which have exercise prices based on the market price at the date of
        grant and, accordingly, no stock compensation expense is required to
       be recorded. During 2001, the Company granted 946,000 stock options
   that are accounted for under U.S. GAAP as variable plan options
       because the exercise price of the stock options is denominated in a
         currency other than the Company's functional currency or the currency
        in which the optionee is normally compensated. At December 31, 2001,
       the market price for the Company's common shares was lower than the
     exercise price of the stock options and therefore no compensation
       expense is required to be recorded for these variable plan options.

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SUPPLEMENTAL INFORMATION
RECONCILIATION WITH UNITED STATES 
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES -- (CONTINUED) 

(TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) 

(E) STOCK COMPENSATION (CONTINUED):                                             

     (ii)  Performance stock options -- The Company has also granted performance
     stock options for which the measurement date is not known until
      certain performance criteria are achieved. During the year ended
         December 31, 2001 the Company recorded $1.9 million in compensation
expense related to the performance stock options.         

(F) SHIPPING AND HANDLING COSTS:                                                

Certain shipping and handling costs are netted against revenue for the
Company's Canadian GAAP consolidated financial statements. U.S. GAAP  
  requires the presentation of revenue without deductions for shipping and
 handling costs. For U.S. GAAP purposes, revenue and cost of sales would
increase by $43.3 million for the year ended December 31, 2001        
(2000 -- $39.2 million).                                              

(G) IMPACT OF RECENTLY ISSUED U.S. ACCOUNTING PRONOUNCEMENTS:                   

(i)  Statement of Financial Accounting Standards No. 141, "Business   
         Combinations" -- FAS 141 requires all business combinations initiated
        after June 30, 2001 to be accounted for using the purchase method of
       accounting. The Company does not believe this statement will have a
material effect on its financial statements.                

  (ii)  Statement of Financial Accounting Standards No. 142, "Goodwill and
           Other Intangible Assets" -- FAS 142 requires that goodwill as well as
      indefinite life intangible assets not be amortized but be tested
          annually for impairment. The statement is effective for fiscal years
          beginning after December 15, 2001. The Company does not believe this
         statement will have a material effect on its consolidated financial
statements.                                               

    (iii) Statement of Financial Accounting Standards No. 143, "Accounting for
        Asset Retirement Obligations" -- FAS 143 requires that obligations
      associated with the retirement of tangible long-lived assets and
           associated retirement costs be recognized at fair value in the period
          in which the obligation is incurred with a corresponding increase in
           the carrying amount of the related long-lived asset. The statement is
           effective for fiscal years beginning after June 15, 2002. The Company
is evaluating the impact of adopting this statement.      

   (iv) Statement of Financial Accounting Standards No. 144, "Accounting for
          the Impairment or Disposal of Long-Lived Assets" -- FAS 144 supersedes
        FAS 121, "Accounting for the Impairment of Long-Lived Assets and for
        Long-Lived Assets to be Disposed Of" and related literature. FAS 144
        establishes a single accounting model, based on the framework of FAS
       121, for long-lived assets to be disposed of by sale. The statement
          retains most of the requirements in FAS 121 related to the recognition
         of impairment of long-lived assets to be held and used. The statement
        is effective for fiscal years beginning after December 15, 2001. The
          Company does not believe this statement will have a material effect on
its consolidated financial statements.                      

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SUPPLEMENTAL INFORMATION
RECONCILIATION WITH UNITED STATES 
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES -- (CONTINUED) 

(TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) 

(H) IMPACT OF U.S. GAAP DIFFERENCES:                                            

(i)  Condensed consolidated balance sheets:                           

                                                        [Enlarge/Download Table]

                                                                            DECEMBER 31,
                                              DECEMBER 31, 2001                 2000    
                                    -------------------------------------   ------------
                                     CANADIAN                     U.S.          U.S.    
                                       GAAP      ADJUSTMENTS      GAAP          GAAP    
                                    ----------   -----------   ----------   ------------
                                                                                        
ASSETS                                                                                  
Current assets..................... $  575,941    $      --    $  575,941    $  663,689 
Property, plant and equipment                                                           
  (b)..............................  1,031,716      110,378     1,142,094     1,179,750 
Other assets (d)...................     85,693       39,705       125,398        94,124 
                                    ----------    ---------    ----------    ---------- 
                                    $1,693,350    $ 150,083    $1,843,433    $1,937,563 
                                    ==========    =========    ==========    ========== 
LIABILITIES AND SHAREHOLDERS'                                                           
  EQUITY                                                                                
Current liabilities................ $  264,974    $      --    $  264,974    $  137,312 
Long-term debt.....................    249,535           --       249,535       399,204 
Other long-term liabilities (d)....     78,911       80,864       159,775       130,627 
Future income taxes (a)............    164,469       20,137       184,606       162,692 
Shareholders' equity:                                                                   
  Capital stock (b)................    538,151      393,948       932,099     1,054,351 
  Additional paid-in capital (e)...         --        2,555         2,555            -- 
  Deferred stock compensation                                                           
     (e)...........................         --         (624)         (624)           -- 
  Retained earnings................    397,310     (333,909)       63,401        53,377 
  Accumulated other comprehensive                                                       
     loss (d)......................         --      (12,888)      (12,888)           -- 
                                    ----------    ---------    ----------    ---------- 
                                       935,461       49,082       984,543     1,107,728 
                                    ----------    ---------    ----------    ---------- 
                                    $1,693,350    $ 150,083    $1,843,433    $1,937,563 
                                    ==========    =========    ==========    ========== 

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SUPPLEMENTAL INFORMATION
RECONCILIATION WITH UNITED STATES 
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES -- (CONTINUED) 

(TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) 

(H) IMPACT OF U.S. GAAP DIFFERENCES (CONTINUED):                                

  (ii)  Condensed consolidated statements of income and retained earnings:

                                                        [Enlarge/Download Table]

                                                                            DECEMBER 31,
                                              DECEMBER 31, 2001                 2000    
                                    -------------------------------------   ------------
                                     CANADIAN                     U.S.          U.S.    
                                       GAAP      ADJUSTMENTS      GAAP          GAAP    
                                    ----------   -----------   ----------   ------------
                                                                                        
Revenue (d)(f)..................... $1,148,965    $  46,515    $1,195,480    $1,058,025 
Cost of sales and operating                                                             
  expenses (d)(f)..................    910,601       26,357       936,958       785,224 
Depreciation and amortization                                                           
  (b)..............................    113,719       23,473       137,192       135,760 
                                    ----------    ---------    ----------    ---------- 
Operating income before undernoted                                                      
  items............................    124,645       (3,315)      121,330       137,041 
Interest expense...................    (31,848)          --       (31,848)      (32,472)
Interest and other income..........     19,028           --        19,028        16,389 
Asset restructuring charge.........    (11,060)          --       (11,060)           -- 
                                    ----------    ---------    ----------    ---------- 
Income before income taxes and                                                          
  undernoted items.................    100,765       (3,315)       97,450       120,958 
Income tax expense (a).............    (29,347)       1,820       (27,527)      (31,747)
                                    ----------    ---------    ----------    ---------- 
Net income before undernoted                                                            
  item.............................     71,418       (1,495)       69,923        89,211 
Cumulative effect of accounting                                                         
  change (d).......................         --         (959)         (959)           -- 
                                    ----------    ---------    ----------    ---------- 
Net income.........................     71,418       (2,454)       68,964        89,211 
Retained earnings (deficit),                                                            
  beginning of year................    384,832     (331,455)       53,377       (26,252)
Excess of purchase price over                                                           
  assigned value of common shares..    (58,940)          --       (58,940)       (9,582)
                                    ----------    ---------    ----------    ---------- 
Retained earnings, end of year..... $  397,310    $(333,909)   $   63,401    $   53,377 
                                    ==========    =========    ==========    ========== 
Basic net income per share before                                                       
  cumulative effect of accounting                                                       
  change........................... $     0.46    $   (0.01)   $     0.45    $     0.52 
                                    ----------    ---------    ----------    ---------- 
Basic net income per share......... $     0.46    $   (0.01)   $     0.45    $     0.52 
                                    ----------    ---------    ----------    ---------- 
Diluted net income per share....... $     0.46    $   (0.02)   $     0.44    $     0.52 
                                    ==========    =========    ==========    ========== 

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SUPPLEMENTAL INFORMATION
RECONCILIATION WITH UNITED STATES 
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES -- (CONTINUED) 

(TABULAR AMOUNTS ARE IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) 

(H) IMPACT OF U.S. GAAP DIFFERENCES (CONTINUED):                                

     (iii) Statement of comprehensive income and accumulated other comprehensive
income:                                                   

                                                        [Enlarge/Download Table]

                                                 DECEMBER 31, 2001  DECEMBER 31, 2000
                                                 -----------------  -----------------
                                                       U.S.               U.S.       
                                                       GAAP               GAAP       
                                                 -----------------  -----------------
                                                                                     
Net income......................................     $ 68,964            $89,211     
Other comprehensive loss, net of income tax:                                         
  Cumulative effect of accounting change (d)....       (9,652)                --     
  Change in fair value of cash flow hedging                                          
     instruments (d)............................       (3,236)                --     
                                                     --------            -------     
Other comprehensive loss........................      (12,888)                --     
                                                     --------            -------     
Comprehensive income............................     $ 56,076            $89,211     
                                                     ========            =======     
Accumulated other comprehensive income,                                              
  beginning of year.............................     $     --            $    --     
Comprehensive loss..............................      (12,888)                --     
                                                     --------            -------     
Accumulated other comprehensive loss, end of                                         
  year..........................................     $(12,888)           $    --     
                                                     ========            =======     

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CONSOLIDATED BALANCE SHEETS 

                                                        [Enlarge/Download Table]

                                                              MARCH 31,     DECEMBER 31,
                                                                 2002           2001    
                                                             ------------   ------------
                                                             (UNAUDITED)                
                                                               (THOUSANDS OF DOLLARS)   
                                                                                        
ASSETS                                                                                  
Current assets:                                                                         
  Cash and cash equivalents.................................  $  286,616     $  332,129 
  Receivables...............................................     117,107        135,219 
  Inventories...............................................      91,222         99,908 
  Prepaid expenses..........................................       7,879          8,685 
                                                              ----------     ---------- 
                                                                 502,824        575,941 
Property, plant and equipment...............................   1,038,350      1,031,716 
Other assets................................................      82,841         85,693 
                                                              ----------     ---------- 
                                                              $1,624,015     $1,693,350 
                                                              ==========     ========== 
LIABILITIES AND SHAREHOLDERS' EQUITY                                                    
Current liabilities:                                                                    
  Accounts payable and accrued liabilities..................  $   78,699     $  110,281 
  Current maturities on long-term debt and other long-term                              
     liabilities............................................     154,682        154,693 
                                                              ----------     ---------- 
                                                                 233,381        264,974 
Long-term debt..............................................     249,595        249,535 
Other long-term liabilities.................................      79,347         78,911 
Future income taxes.........................................     161,767        164,469 
Shareholders' equity                                                                    
  Capital stock.............................................     526,555        538,151 
  Retained earnings.........................................     373,370        397,310 
                                                              ----------     ---------- 
                                                                 899,925        935,461 
                                                              ----------     ---------- 
                                                              $1,624,015     $1,693,350 
                                                              ==========     ========== 

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CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS 

                                                        [Enlarge/Download Table]

                                                                THREE           THREE     
                                                             MONTHS ENDED    MONTHS ENDED 
                                                              MARCH 31,       MARCH 31,   
                                                                 2002            2001     
                                                             ------------    ------------ 
                                                                     (UNAUDITED)          
                                                                (THOUSANDS OF DOLLARS,    
                                                             EXCEPT NUMBER OF SHARES AND  
                                                                  PER SHARE AMOUNTS)      
                                                                                          
Revenue..................................................... $    181,727    $    372,942 
Cost of sales and operating expenses........................      171,155         250,036 
Depreciation and amortization...............................       28,053          27,460 
                                                             ------------    ------------ 
Operating income (loss) before undernoted items.............      (17,481)         95,446 
Interest expense............................................       (6,651)         (8,141)
Interest and other income...................................        2,365           4,285 
                                                             ------------    ------------ 
Income (loss) before income taxes...........................      (21,767)         91,590 
Income tax recovery (expense)...............................        4,390         (22,812)
                                                             ------------    ------------ 
Net income (loss)...........................................      (17,377)         68,778 
Retained earnings, beginning of period......................      397,310         384,832 
Excess of repurchase price over assigned value of common                                  
  shares....................................................       (6,563)             -- 
                                                             ------------    ------------ 
Retained earnings, end of period............................ $    373,370    $    453,610 
                                                             ============    ============ 
Weighted average number of common shares outstanding*.......  129,633,320     161,168,474 
Basic and diluted net income (loss) per common share........ $      (0.13)   $       0.43 

---------------                                                                 

* number of common shares outstanding at March 31, 2002: 128,329,942 (March 31, 
2001: 162,178,791)                                                          

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CONSOLIDATED STATEMENTS OF CASH FLOWS 

                                                        [Enlarge/Download Table]

                                                                 THREE           THREE    
                                                             MONTHS ENDED    MONTHS ENDED 
                                                               MARCH 31,       MARCH 31,  
                                                                 2002            2001     
                                                             -------------   -------------
                                                                      (UNAUDITED)         
                                                             (THOUSANDS OF DOLLARS, EXCEPT
                                                                  PER SHARE AMOUNTS)      
                                                                                          
CASH FLOWS FROM OPERATING ACTIVITIES:                                                     
Net Income (loss)...........................................   $(17,377)       $ 68,778   
Add:                                                                                      
  Depreciation and amortization.............................     28,053          27,460   
  Future income taxes.......................................     (2,702)          8,312   
  Other.....................................................      2,071           2,047   
                                                               --------        --------   
Cash flows from operating activities before undernoted                                    
  changes...................................................     10,045         106,597   
Receivables and accounts payable and accrued liabilities....     (8,796)          5,933   
Inventories and prepaid expenses............................      9,079            (968)  
Utilization of prepaid natural gas..........................       (210)           (196)  
                                                               --------        --------   
                                                                 10,118         111,366   
                                                               --------        --------   
CASH FLOWS FROM FINANCING ACTIVITIES:                                                     
Repayment of other long-term liabilities....................       (524)           (965)  
Payment for shares repurchased..............................    (19,304)             --   
Issue of shares on exercise of incentive stock options......      1,145           4,516   
                                                               --------        --------   
                                                                (18,683)          3,551   
                                                               --------        --------   
CASH FLOWS FROM INVESTING ACTIVITIES:                                                     
Plant and equipment under development.......................    (30,855)             --   
Property, plant and equipment...............................     (1,396)         (5,142)  
Accounts payable and accrued liabilities related to capital                               
  expenditures..............................................     (4,674)           (228)  
Other assets................................................        (23)         (1,635)  
                                                               --------        --------   
                                                                (36,948)         (7,005)  
                                                               --------        --------   
Increase (decrease) in cash and cash equivalents............    (45,513)        107,912   
Cash and cash equivalents, beginning of period..............    332,129         225,942   
                                                               --------        --------   
Cash and cash equivalents, end of period....................   $286,616        $333,854   
                                                               ========        ========   
SUPPLEMENTARY CASH FLOW INFORMATION:                                                      
Interest paid, net of capitalized interest..................   $ 13,846        $ 15,346   
Income taxes paid...........................................   $    377        $  2,657   
Basic and diluted cash flows from operating activities per                                
  common share*.............................................   $   0.08        $   0.66   

---------------                                                                 

* before changes in non-cash working capital and utilization of prepaid natural 
gas                                                                         

  F-27

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED) 

THREE MONTHS ENDED MARCH 31, 2002 

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

    These consolidated financial statements should be read in conjunction with
the consolidated financial statements included elsewhere in this prospectus.    
Except with respect to the change in accounting policies described below, the   
accounting policies applied in these interim consolidated financial statements  
are consistent with those applied in the audited consolidated financial         
statements included elsewhere in this prospectus.                               

1.  INTEREST IN JOINT VENTURE                                                   

  The Company has a 63.1% joint venture interest in Atlas Methanol Company
("Atlas"). The joint venture is constructing a 1.7 million tonne per year       
methanol plant in Trinidad. Construction is expected to be completed by the end 
of 2003.                                                                        

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

                                                        [Enlarge/Download Table]

                                                     MARCH 31, 2002   DECEMBER 31, 2001
                                                     --------------   -----------------
                                                               ($ THOUSANDS)           
                                                                                       
CONSOLIDATED BALANCE SHEET                                                             
  Current assets....................................    $11,133            $ 1,955     
  Property, plant and equipment.....................     86,906             63,131     
  Current liabilities...............................      2,400              7,690     

                                                        [Enlarge/Download Table]

                                                         THREE MONTHS     THREE MONTHS 
                                                            ENDED            ENDED     
                                                        MARCH 31, 2002   MARCH 31, 2001
                                                        --------------   --------------
                                                                 ($ THOUSANDS)         
                                                                                       
CONSOLIDATED STATEMENT OF CASH FLOWS                                                   
  Cash outflows from investing activities..............    $29,065            $ --     

During the three months ended March 31, 2002, $1.5 million (March 31, 
2001 -- $ nil) of interest was capitalized to plant and equipment under         
development.                                                                    

  To March 31, 2002, the joint venture had no revenue and all expenditures
were capitalized to plant and equipment under development.                      

  The Company estimates that its share of capital expenditures to complete
the construction of Atlas will be $178 million and will be incurred over the    
period to December 31, 2003. The Company expects that these expenditures will be
funded from project financing, cash generated from operations and cash and cash 
equivalents. The Company's total equity contribution to the joint venture is    
expected to be approximately $100 million. At March 31, 2002, the Company       
estimates its future cash equity contribution to the project will be            
approximately $34 million.                                                      

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

2.  CAPITAL STOCK AND SHARE REPURCHASE                                          

    Changes in the capital stock of the Company during the period December 31,
2001 to March 31, 2002 were as follows:                                         

                                                                [Download Table]

                                                          NUMBER OF                 
                                                        COMMON SHARES  CONSIDERATION
                                                        -------------  -------------
                                                                       ($ THOUSANDS)
                                                                                    
Balance, December 31, 2001.............................  131,167,942     $538,151   
Issued on exercise of incentive stock options..........      270,000        1,145   
Shares repurchased.....................................   (3,108,000)     (12,741)  
                                                         -----------     --------   
Balance, March 31, 2002................................  128,329,942     $526,555   
                                                         ===========     ========   

   During the three months ended March 31, 2002, the Company repurchased for
cancellation 3.1 million common shares. The cost to acquire the shares in the   
amount of $19.3 million was allocated $12.7 million to capital stock and $6.6   
million to retained earnings.                                                   

3.  NET INCOME PER SHARE                                                        

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

                                                        [Enlarge/Download Table]

                                                THREE MONTHS ENDED  THREE MONTHS ENDED
                                                  MARCH 31, 2002      MARCH 31, 2001  
                                                ------------------  ------------------
                                                                                      
Denominator for basic net income per share.....    129,633,320         161,168,474    
Effect of dilutive stock options...............             --             206,604    
                                                   -----------         -----------    
Denominator for diluted net income per share...    129,633,320         161,375,078    
                                                   ===========         ===========    

4.  STOCK OPTIONS                                                               

   (a)  Common shares reserved for incentive stock options at March 31, 2002
were as follows:                                            

                                                        [Enlarge/Download Table]

                                         OPTIONS DENOMINATED         OPTIONS DENOMINATED    
                                               IN CAD$                      IN US$          
                                      --------------------------  --------------------------
                                      NUMBER OF      WEIGHTED     NUMBER OF      WEIGHTED   
                                        STOCK        AVERAGE        STOCK        AVERAGE    
                                       OPTIONS    EXERCISE PRICE   OPTIONS    EXERCISE PRICE
                                      ---------   --------------  ---------   --------------
                                                                                            
Outstanding at December 31, 2001..... 8,690,750       $10.09             --       $  --     
Granted..............................        --           --      2,449,000        6.45     
Exercised............................  (270,000)        6.73             --          --     
Cancelled............................    (4,750)        7.35             --          --     
                                      ---------       ------      ---------       -----     
Outstanding at March 31, 2002........ 8,416,000       $10.20      2,449,000       $6.45     
                                      =========       ======      =========       =====     

     As of March 31, 2002, 6,515,050 incentive stock options were exercisable at
an average price of Cdn.$10.81.                                                 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) 

4.  STOCK OPTIONS (CONTINUED):                                                  

     (b)  Effective January 1, 2002, the Company adopted the new recommendations
          of the Canadian Institute of Chartered Accountants with respect to the
 accounting for stock-based compensation and other stock-based
        payments. The new recommendations require equity instruments awarded
         to employees and the cost of the service received as consideration to
    be measured and recognized based on the fair value of the equity
          instruments issued. Compensation expense is recognized over the period
         of related employee service, usually the vesting period of the equity
         instrument awarded. Alternatively, the new recommendations permit the
  measurement of compensation expense for stock option grants to
      employees and directors that are not direct awards of stock, stock
         appreciation rights or otherwise call for settlement in cash or other
          assets by an alternative method and to provide pro forma disclosure of
      the financial results using the fair value method. The Company has
        elected to follow an alternative method and continue with the former
       accounting policy of recognizing no compensation expense when stock
        options are granted because the Company grants stock options with an
          exercise price based on the market price at the date of the grant. Had
        compensation expense been determined based on the fair value method,
      the Company's net loss and net loss per share for the three months
   ended March 31, 2002, would have been adjusted to the pro forma
amounts indicated below:                                    

                                                                [Download Table]

                                                           THREE MONTHS ENDED    
                                                             MARCH 31, 2002      
                                                        -------------------------
                                                              ($ THOUSANDS,      
                                                        EXCEPT PER SHARE AMOUNTS)
                                                                                 
Net loss -- as reported................................         $(17,377)        
Net loss -- pro forma..................................          (17,718)        
                                                                --------         
Net loss per share -- as reported......................         $  (0.13)        
Net loss per share -- pro forma........................            (0.14)        
                                                                ========         

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

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

5.  NATURAL GAS                                                                 

  Production from the Company's New Zealand operations is dependent on the
supply of natural gas from the Maui field. The current contractual natural gas  
entitlements are sufficient to operate the New Zealand plants at capacity for   
the equivalent of approximately three years. During 2001, the owners of the Maui
field announced that the Maui reserves may be materially less than previously   
estimated and below the aggregate of contract quantities. This could potentially
reduce the amount of contracted natural gas available to Methanex. The process  
to determine the available reserves in the Maui field is expected to be         
completed by the end of 2002. The Company is continuing to pursue acquisitions  
of additional natural gas to supply our New Zealand plants. However, there can  
be no assurance that we will be able to secure additional natural gas in New    
Zealand at commercially acceptable terms.                                       

  F-30

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---------------------------------------------------------                       
---------------------------------------------------------                       

No dealer, salesperson or other person is authorized to give any information
or to represent anything not contained in this prospectus. You must not rely on 
any unauthorized information or representations. This prospectus is an offer to 
sell only the Notes offered hereby, but only under circumstances and in         
jurisdictions where it is lawful to do so. The information contained in this    
prospectus is current only as of its date.                                      

----------------------

TABLE OF CONTENTS 

                                                                [Download Table]

                                             Page
                                             ----
                                                 
Summary..................................       1
Special Note Regarding Forward-Looking           
  Statements.............................       7
Reference Information....................       7
Risk Factors.............................       8
Use of Proceeds..........................      14
Consolidated Capitalization..............      14
Selected Historical Consolidated                 
  Financial and Operating Data...........      15
Management's Discussion and Analysis.....      18
The Methanol Industry....................      28
Our Business.............................      33
Management...............................      44
Principal Shareholders...................      46
Description of Certain Indebtedness......      46
Description of the Notes.................      48
Credit Ratings...........................      65
Pro Forma Interest Coverage..............      66
Tax Considerations.......................      66
Underwriting.............................      69
Legal Matters............................      70
Experts..................................      71
Documents Incorporated by Reference......      71
Where you can find More Information......      72
Documents Filed as Part of the                   
  Registration Statement.................      72
Index to Consolidated Financial                  
  Statements.............................     F-1

---------------------------------------------------------                       
---------------------------------------------------------                       
                       ---------------------------------------------------------
                       ---------------------------------------------------------

$200,000,000

METHANEX CORPORATION

8.75% Senior Notes due 2012 
----------------------

[LOGO]
----------------------

GOLDMAN, SACHS & CO.
CIBC WORLD MARKETS
RBC CAPITAL MARKETS 
                       ---------------------------------------------------------
                       ---------------------------------------------------------

Dates Referenced Herein   and   Documents Incorporated by Reference

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