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Friday 20 April 2007 Experts that have talked about Methanex Corp

many notes below from Andrew L. de Courcy-Ireland, CIM, FCSI
Portfolio Manager CANACCORD CAPITALTel: (514) 844-5520

2008

Wednesday 14 May 2008 Methanex* (MX : TSX : $27.34), Net Change: -0.09, % Change: -0.33%, Volume: 287,876
"Journalist: a writer whose skill is improved by a deadline; the more time he has, the worse he writes." - Karl Kraus. We walked to work yesterday on a grey Vancouver morning and discovered BNN running a silent caption that read: "Methanex to Double Methanol". There was no news from the company. It turns out BNN based this one-liner on a Bloomberg article yesterday morning titled "Methanex to Double Methanol Output by 2011, Says CEO Aitken," and quoting him as saying, "I think there's a good chance we'll get all that operating by 2011." Well, the CEO made these comments on May 6, so it is hardly news. The stock was up as much as 35 cents (a 1.28% gain) out of the gate but gave that gain up in about 10 minutes before it turned negative. Whoops. By the way, the downside to getting that lost methanol production back is: a) It will add more pressure to methanol prices as it dramatically increases supply; and b) Securing the natural gas is likely to cost more (much more?) than it did in the past, hurting margins. As for the $100 million Methanex is committing to natural gas exploration and development work, there are no assurances of how much gas those efforts will yield. Unfortunately, the operator in those exploration efforts does not have a particularly strong track record with such endeavors. Few do.

Tuesday 13 May 2008 Methanex (MX) plans to increase output of the chemical to record highs within three years, CEOBruce Aitken said. Vancouver-based Methanex, which has been hurt by the loss of Argentine natural-gas supplies to its methanol complex in Cabo Negro, Chile, said last week it's committing $100 million to accelerate exploration for gas to return the four plants to full capacity.

Thursday 08 May 2008 (MX : TSX : $27.50 | MEOH : NASDAQ : US$27.47)
Share repurchase program prompts estimate revision
RBC Capital Markets maintains "underperform", 12-month target price is US$24.00

Wednesday 07 May 2008
(MX : TSX : $27.40), Net Change: 3.02, % Change: 12.39%, Volume: 964,528
That don’t Empresa me much. Empresa Nacional del Petroleo, Chile’s state-owned oil and gas company, has agreed to accelerate exploration and development of a natural-gas project in the South American country. Methanex, the world’s largest supplier of methanol, will spend $100 million in the next three years for a 50% stake in the project to gain gas supplies for its Chilean plants. CEO Bruce Aitken is moving to expand exploration for gas in Chile to help replace supply from Argentina, which has slowed exports to preserve supply for use within its own borders. Methanex’s plants in Chile have been running at about 30% of capacity since last June. In addition, Methanex is raising its quarterly dividend by 11% and will buy back up 10% of its common stock. This is the sixth year in a row that Methanex has increased its dividend since inception in 2002, which, according to Aitken, “reflects our continued confidence in the outlook for our business and the methanol industry.”

Tuesday 29 April 2008 (MX : TSX : $26.05 | MEOH : NASDAQ : US$25.68)
Q1/08 results below expectations, impacted by higher repurchases and lower product sales
BMO Capital Markets maintains "market perform", 12-month target price is cut to $30.00

Saturday 19 April 2008
(MX : TSX : $27.50 | MEOH : NASDAQ : US$27.13)Expecting a miss in first quarter
Raymond James rates a "underperform", 6-12 month target price is $21.00

Friday 11 April 2008 Methanex (MX : TSX : $26.13), Net Change: -0.97, % Change: -3.58%, Volume: 392,169
Ever eat at the famous steakhouse Cabana Las Lilas in Buenos Aires? If so, you'll understand why Argentina is low of natural gas. The world's largest producer of methanol was cut from "buy" to something UN peacekeepers profess to be (but usually aren't). They cite the simple fact that though the stock was up 10% in the past two months, methanol prices have dropped 25% during the same time. UBS expects below consensus results thanks to dwindling methanol prices and slower sales. Spot methanol prices dropped last week to US$313-346/metric tonne down from US$366-382/metric tonne. That is less than half last year's brief peak. Q1 results are to be released after market close on Wednesday April 23, followed by a conference call Thursday morning.

Wednesday 26 March 2008 Methanex (MX : TSX : $28.35), Net Change: 0.83, % Change: 3.02%, Volume: 250,971
So much for those supply/demand diagrams when Mr. Market is buying at the bar. The market continued to ignore the fact that the methanol spot price fell another $25/tonne in a week to $406/tonne. The North American contract price for April is down $100/tonne to $532/tonne (a drop from $632/tonne in March). Talk is that European Q2 contract price discussions are looking to be 200 euros/tonne lower than Q1. Demand for methanol continues to be weak, especially in Europe and the U.S. Don't forget that more supply is expected, namely a 5% increase to world supply expected from Saudi Arabia in the summer. Methanex's Chilean outage helped spur the price to $980/tonne. Ironically, at $980/tonne, Methanex was more profitable without its Chilean production than earning $225/tonne with it. But as we have seen, $980/tonne is not sustainable and at some point the stock market will realize that the methanol market will re-balance at a lower price and that the Chilean production outage will have resulted in only a temporary spike in methanol prices and Methanex's earnings.

Thursday 13 March 2008 (MX : TSX : $28.68 | MEOH : NASDAQ : US$28.95)
Potential resumption of gas supply from Argentina
Canaccord Adams maintains "sell", 12-month target price is US$22.00
RBC Capital Markets maintains "underperform", 12-month target price is US$24.00

Wednesday 12 March 2008 (MX): $28.85 – Argentina Could Lift Gas Restrictions
Underperform, Above Average Risk, Price Target: $24.00
Argentina's government announced that it would increase its natural gas exports to central Chile and raise its duty on natural gas exports. The government will also reportedly allow the resumption of natural gas exports to southern Chile, where Methanex's facilities are located, but at a much higher price. An Argentinean government official stated, "We'll have to see if Methanex wants to pay this higher price." However, the government did not indicate how much the natural gas export duty would increase. According to Methanex, the company has not received any official information from the government regarding the announcement and is awaiting additional details before deciding on how to proceed. RBC CM expect methanol prices to continue to decline over time as new capacity comes into service. Given the potential negative implications, RBC CM is assuming that Methanex will not restore production using Argentinean gas even if available. RBC CM target price of $24.00 is consistent with its discounted cash flow analysis and reflects a 2009E EV/EBITDA multiple of 7.3x.

Monday 28 January 2008 (MX : TSX : $24.02 | MEOH : NASDAQ : US$23.95)
Strong Q4
BMO Capital Markets maintains "market perform", 12-month target price is US$26.00
RBC Capital Markets maintains "underperform", 12-month target price is US$24.00
Scotia Capital Markets maintains "sector underperform", 12-month target price is $25.00

Friday 25 January 2008 (MX : TSX : $24.00), Net Change: 2.00, % Change: 9.09%, Volume: 661,616
Not sustainable – not even close. Methanex achieved much stronger-than-expected results in the fourth quarter ($1.74 per share versus Canaccord Adams’ $1.40 forecast and $1.05 consensus), despite realized pricing and operating costs per tonne being in line with our expectations. The very impressive results were largely due to 57% higher than expected sales of third-party product during a period when we thought product would be difficult to source (accounting for about $0.20 per share of added earnings), 20% higher-than-expected internal sales due to internal sales being 136,000 tonnes more than internal production (inventory gain added ~$0.20 per share), a 2% lower tax rate (~$0.06 per share) and some minor partial offsets. Canaccord Adams Industrial Growth Analyst Bob “Ayeee” Hastings says the results were fantastic during a very tight but difficult market. Unfortunately, the profitability is not sustainable – not even close. Product pricing is already heading lower, inventory losses are expected to occur as recent third-party purchases have likely been done at prices above the current, and declining market prices and volumes should be well lower.

Thursday 24 January 2008 (MX): US$22.41 - Q4 Results Above Expectations
Underperform, Above Average Risk
MX reported EPS of $1.72, ahead of RBC CM’s estimated $1.33 and consensus of $1.05. The upside came from higher than expected sales volumes and production. RBC CM was surprised by the magnitude of the inventory drawdown as management indicated that inventory levels were at a point where it was difficult to manage.

Tuesday 08 January 2008 Methanex* (MX : TSX : $25.05), Net Change: -0.86, % Change: -3.32%, Volume: 344,568
Know where Yoda vacations? Hawaii, of course. While shares of the world’s largest producer of methanol have declined by over 15% from recent highs, Canaccord Adams Chemicals Analyst Bob Hastings thinks there is still more downside potential, as an expected decline in the price of methanol will push down Methanex’s profitability and ultimately the value of its shares. The price of methanol is expected to decline driven both by a decline in demand and an increase in supply. Because of the high price of methanol over the past few years, customers have been finding alternatives to methanol; for example, China is no longer blending methanol into its gasoline. As well, a decline in demand is being driven by broad economic factors, including the housing market. Roughly 40% of methanol is used for the production of formaldehyde, and roughly one half of formaldehyde is used by the housing market. The three million tonnes of production lost by Methanex in Chile is being more than made up by new production being brought online by competing facilities throughout the world. If Methanex’s Chilean facilities come back on line, that incremental production would put even greater pressure on the price of methanol. This combined with some recent insider selling points towards potential weakness in the stock.

2007

Saturday 22 December 2007 (MX : TSX : $26.21 | MEOH : NASDAQ : US$26.29)
Signs of Methanol price peak
Raymond James downgrades to "underperform", 6-12 month target price is cut to $23.00

Wednesday 28 November 2007
(MX): $27.11 – Posts Higher Methanol Prices for North America
Underperform, Above Average Risk, Price Target: $24.00
Methanex increased its North America non-discounted reference price from $665/tonne to $832/tone for December. Accordingly, RBC CM has revised its 2007 EPS estimate from $3.20 to $3.26 and decreased its 2008 EPS estimate from $2.38 to $2.34. RBC CM is maintaining its current underperform, above average risk rating with a price target of $24.00 to reflect its outlook for methanol prices, and Methanex’s growth opportunities and risk profile.

Monday 29 October 2007 Methanex Corp. (MX : TSX : $27.12 | MEOH : NASDAQ : US$28.17)
Uncertainty over Argentinean gas supply
RBC Capital Markets maintains "underperform", 12-month target price is US$24.00

Friday 26 October 2007 Methanex (MX : TSX : $25.90), Net Change: -0.59, % Change: -2.23%, Volume: 318,213
At this price, maybe we should start drinking the stuff? Methanex’s CEO put it like this: “Our biggest area of disappointment during the quarter was the continued curtailment of Argentinean natural gas supply to our plants in Chile. Our expectation was that natural gas supply from Argentina would be restored during the third quarter as cold winter conditions ended and gas demand in Argentina was reduced; however, this has not yet occurred and we continue to be limited to operating only one plant in Chile.” Methanol prices are up because Methanex can’t get its Argentina plants to run. This represents about half of Methanex’s total production so it is little wonder they earned only $0.24 per share vs. the Reuters analysts' estimate of $0.29 EPS. Bigger picture, this disruption and resulting high prices is making methanol look risky as a source of energy relative to oil or coal. Canaccord Adam's Bob Hastings says for the first time in its history, Methanex may have to declare force majeure to its customers, and soon, as its inventory position appears almost exhausted when factoring in how much resides in the supply chain. While customers will not be happy with the lack of supply, they may be more unhappy with the expected increase in Methanex’s earnings. We suspect that with the current (and very temporary) high prices the company may find itself explaining to customers why fourth quarter earnings may quadruple after it lost almost half of its production and added to customer woes. This is a very serious customer problem in the short-term and the long-term. It will likely cost the company some customers, even if the Chilean plants come back. Near-term, it will likely cause Chinese companies using methanol for energy to stop and instead export methanol, eventually driving prices downwards. Longer-term, outages will likely make existing users re-examine its use and cause potential customers examining methanol for new uses to permanently disappear. Consequently, temporarily strong earnings could be followed by permanent demand destruction, lost new uses and lower long-term prices.

Thursday 25 October 2007 Methanex (MX) - US$27.37 - Q3 Results Lower Than Expected
Underperform, Above Average Risk Monday 22 October 2007 Methanex Corp. (MX : TSX : $26.17 | MEOH : NASDAQ : US$27.10)
Potential increase in Argentinean gas export duty
RBC Capital Markets maintains "underperform", 12-month target price is $24.00

Monday 22 October 2007 Methanex Corp (MX) - $26.83
- Argentinean Gas Export Duty Could Increase with Higher Bolivian Gas Prices
Underperform, Above Average Risk, Price Target: $24.00
Bolivia increased the price of natural gas exports to Argentina from $5.08/MMbtu to $6.01MMBtu due to high oil prices. RBC CM anticipates that Argentina could eventually increase its duty on natural gas exports to Chile to recover the higher cost of natural gas from Bolivia. In June 2006, Bolivia increased the price of natural gas exports to Argentina, and shortly thereafter, Argentina’s government increased the duty on exports of natural gas from Argentina to Chile. At this point in time the announcement is irrelevant since Methanex is not receiving any gas from Argentina but it could become a drag on earnings when Argentina lifts its gas export restrictions to Chile.

Wednesday 10 October 2007
Methanex (MEOH : NASDAQ : US$26.77), Net Change: -0.07, % Change: -0.26%, Volume: 288,906
Methanex (MX : TSX : $26.44), Net Change: -0.69, % Change: -2.54%, Volume: 244,909
Is it time to short again? Last week Methanex shares popped after the company announced an up-tick in October reference prices for methanol of US$565 per tonne for North America and US$520 per tonne for Asia Pacific. That compared to $319 per tonne and $300 per tonne, respectively, in the month previous. The problem for Methanex is that their inability to secure natural gas for their Chilean facilities has put their three million tonne capacity in that country on ice. Methanex’s total production is therefore running at about 50% so this increase in methanolprices (which the Chilean shut down is causing) will not benefit their bottom line. Canaccord Adams Analyst Bob Hastings has set his low target price based on his concern of gas supplies to Chile, its largest methanol production site, and potentially higher costs to replace Argentinean gas. While high energy prices may cause methanol pricing at the trough to be significantly higher than at previous troughs, Hastings believes higher gas costs and potentially lower production will more than offset the higher trough price.

Tuesday 02 October 2007 Methanex Corp. (MX : TSX : $26.80 | MEOH : NASDAQ : US$27.24)
October Methanol prices higher than expected
RBC Capital Markets maintains "underperform", 12-month target price is $24.00

Tuesday 02 October 2007 Methanex (MEOH : NASDAQ : US$25.40), Net Change: 1.53, % Change: 6.41%, Volume: 1,504,384
Methanex (MX : TSX : $25.03), Net Change: 1.15, % Change: 4.82%, Volume: 760,594
Playing the sympathy card. Significant methanol plant outages have been pushing methanol prices higher with U.S. Gulf Coastspot prices reaching $516/tonne last week, more than doubling from $253/tonne since the beginning of August. Methanol prices are escalating due to Methanex’s 3.0 million tonne capacity outage at its Chilean facilities. With production running at around 50%, Methanex will not see the benefit of higher methanol prices in its earnings. Canaccord Adams Analyst Bob Hastings says, Methanex’s share price could move higher in the short term on “sympathy”with rising methanol prices and recommend investors NOT to be short the stock in the near term. Methanex is the world’s largest producer and marketer of methanol and operates facilities located in Chile, Trinidad, New Zealand and North America.

Monday 01 October 2007 Methanex (MX) - $25.40 - October Methanol Prices Higher than Forecast
Underperform, Above Average Risk, Price Target: $24.00
Methanex posted its methanol reference price for October of $565/tonne in North America and $520/tonne in Asia Pacific. RBC CM had forecasted a non-discounted methanol price for Q4/07 of $470/tonne, however based on the announcement has revised upwards its price assumption to $550/tonne. Accordingly, the 2007 EPS estimate has also be revised from $2.82 to $3.13. However, the 2008 EPS estimate will decline to $2.38 (from $2.42) to reflect increased natural gas supply costs which in part are tied to methanol prices on a 12 month rolling basis. RBC CM believes that history may be repeating itself, as similar to last year, methanol prices are peaking due to production disruption. RBC CM does foresee that the methanol market will be brought back into balance, however, that in the meantime Methanex’s share price may follow a similar trend as in the pervious year. Last year Methanex’s share price rose to a high of $29.50 on January 24th, and then two months later was trading in the $22 range, as methanol prices returned to pre-disruption levels.

Tuesday 25 September 2007 Methanex Corp. (MX : TSX : $22.39 | MEOH : NASDAQ : US$22.50)
Chilean production problems continue
RBC Capital Markets maintains "underperform", 12-month target price is raised to US$24.00

Monday 24 September 2007 Methanex (MX) - $22.66 - Chilean Production Problems Continue, Methanol Price Assumptions Increased Underperform, Above Average Risk, Price Target: $24.00 (was $22.00)
Methanex continues to lose production due to Argentinean natural gas export restrictions. RBC CM remains optimistic that production will eventually resume at the three idled plants in Chile but there is a risk that these facilities could become stranded assets if the gas restrictions remain in place. Methanex outlined two potential price scenarios in Q4. Under the optimistic scenario for its customers, the market could potentially be balanced if gas supplies from Argentina resume, Iranian production increases, production from Oman comes into service successfully and global operating rates increase. Under the pessimistic scenario where Argentinean gas restrictions remain in place, the global market could be short supplied by up to 500,000 tonnes. RBC CM believes the latter scenario is more likely, and increased its methanol price assumption from $280 per tonne to $470 per tonne.

Saturday 08 September 2007 Methanex downgraded on fears about natural gas supply 
Raymond James analyst Daryl Swetl ishoff downgraded Methanex Corp. (MX/TSX) from "market perform" to "underperform" on Wednesday... 

Methanex (MX : TSX : $23.38), Net Change: -0.62, % Change: -2.58%, Volume: 444,238 They’re still not getting any. Methanex updated investors on the status of its three Chilean methanol units that are currently offline. Despite the resolution of technical issues impacting natural gas pipeline transmission infrastructure, Methanex is still not receiving natural gas and the three units remain offline. In a press release, the company stated that there is no surplus natural gas transportation capacity to move available gas from Argentina’s southern region to the north. Consequently, not only is there no

Methanex Corp. (MX : TSX : $23.32 | MEOH : NASDAQ : US$22.15)
Cautious fundamental outlook
Canaccord Adams maintains "sell", 12-month target price is US$16.00
Raymond James downgrades to "underperform", 12-month target price is US$18.00
RBC Capital Markets maintains "underperform", 12-month target price is US$22.00

Wednesday 29 August 2007 Methanex (MX : TSX : $23.05), Net Change: 0.00, % Change: 0.00%, Volume: 371,256
Chile needs gas – no buts about it. Methanol spot prices are up about 30% in the last month, driven in large part due to speculators bidding up the commodity price as three of four of Methanex’s Chile plants are late getting back into production. reason for not receiving natural gas due to some technical pipeline or gas field reason, there is also no economic reason for it not to be delivered. While seasonal gas restrictions in the Argentine winter can mean supply disruptions, we have never seen 79% of production shuttered before and this disruption is continuing despite warm weather. We suspect that the reason continues to be political in nature as Argentina imports natural gas at a high (US$5/mmbtu) price and is finding it difficult to export at a lower price (even after the natural gas tax – recall that this was the reason for imposing the export tax). Note that national presidential and legislative elections are scheduled for October 28 and it could be that politicians wish to avoid the export issue until this time. The problem these plants have is securing natural gas supplies from Argentina to run. What many market participants seem to be forgetting is that Methanex does not benefit from the higher prices when three of their plants are not producing! Late last month, Methanex said on a conference call that two of the units would be back running within 2-3 weeks. They have been down since June 11 so the longer they stay out, the higher the speculators may be willing to take methanol prices. But approximately 40-50% of Methanol’s production is missing the party.

Thursday 26 July 2007 Methanex (MX) - US$25.05 - Short Term Challenges Persist
Underperform, Above Average Risk – Price Target: US$22.00
Methanex reported weaker than expected Q2 results yesterday, due to due to higher costs from Argentine natural gas export duties, unabsorbed fixed costs due to lower production rates at the Chilean facilities and selling, general and administrative expenses. The price target

Friday 27 April 2007 Methanex Corp. (MX) - Double Whammy: Higher Gas Supply Costs and Lower Methanol Prices Underperform, Above Average Risk, Price Target $19.00 RBCCM reports on Methanex conference call to discuss its Q1/07 results and near-term outlook. Management has confirmed sharing of export duty increases at lower methanol price levels. Of note is the Argentinean Gas Supply Arrangements, which significantly change the cost structure of the company under $250/tonne – increasing production cash costs about 45%-80% (largely due to an Argentinean export duty of $2.25/MMBtu added to natural gas costs - originally at $1). 2007 EPS estimates have been reduced from $2.98 to $2.78 to reflect Methanex's interim arrangements with its gas suppliers under which it shares the cost of Argentina's export duty. Other headwinds into Q2/07 include: a negative $35 million impact from the sale of high cost inventory in Q2/07 and margin compression due to the above taxes (with possible temporary shut-downs). Price target of $19.00 is based upon a 2008E EV/EBITDA multiple of 9.0x and a DCF analysis based on an unlevered equity discount rate of 12%.

Wednesday 21 March 2007 Methanex (MX) – US$23.68 – European Methanol Prices Decline; Target Price Reduced Underperform, Above Average Risk – Price Target: US$19.00
The European methanol reference price declined by €170 per tonne, greater than the €60 per tonne decline RBC CM had been expecting. Historically, Methanex’s price has moved in the same direction as methanol prices and as such RBC CM believes MX shares will likely trend lower. RBC CM has reduced its earnings estimates to reflect the lower methanol prices and the target price was reduced to $19.00 from $20.00.

Wednesday 28 February 2007 Methanex (MX) – US$25.52 – Good Time to Lock in Profits
Underperform, Above Average Risk – Price Target: US$20.00 Yesterday, Methanex’s share price declined by only 1.9% compared to an average decline of 4.7% for its Canadian peer group. RBC CM was somewhat surprised that Methanex’s shares outperformed the peer group, given the concerns over a potential economic slowdown in China’s economy. In the event of a slowdown, RBC CM expects Methanex to be negatively impacted since the Asia Pacific region represented about 28% of Methanex’s total sales volume in 2005.

Saturday 27 January 2007 Methanex (MX) – US$26.20 – Lowering Target Price to Reflect Higher Forecast Export Duty Costs Underperform, Above Average Risk – Price Target: US$20.00
RBC CM has updated its financial model to reflect higher forecast export duty costs and details provided from the Q4/06 results. The 2007 & 2008 EPS estimates fell to $4.25 and $0.23 from $4.81 and $0.57, respectively, largely as a result of the impact of higher forecast costs associated with Methanex’s agreements to share the cost of Argentina’s natural gas export duty with its suppliers. The target price falls to $20.00 from $23.00. RBC CM believes that Methanex’s share price will decline over time as new capacity comes into service in 2007 and 2008.

Thursday 25 January 2007
Methanex (MX) - US$29.45 – Q4/06 Earnings Lower than RBC CM Expected
Underperform, Above Average Risk – Price Target: US$23.00
Fourth quarter results missed expectations with a normalized EPS of $1.61, which was in line with the consensus estimate but was lower than the RBC CM estimate of $1.92. The variance from the RBC CM estimate was largely attributable to lower than expected realized prices and sales volumes. The company disclosed that it has reached interim agreements with all of its natural gas suppliers in Argentina and has agreed to share the cost of the export duty based on prevailing methanol prices. From the report it appears that Methanex is effectively sharing about 50% of the cost of the Argentine export duty based on amounts the company accrued in Q4/06. The target and rating remain unchanged.

2006

Friday 27 October 2006 METHANEX(MX)$24.68 – Q3 ABOVE EXPECTATIONS. RATING: OUTPERFORM(WAS UNDERPERFORM). TARGET: $31.00 (WAS $28.30). RISK RATING: ABOVE AVERAGE. INDUSTRY RATING: UNDERWEIGHT.
Q3 2006 Reported Net income was US$113.2 million or US$1.05 per share vs. a net loss of US$21.8 million or (US$0.19) per share in Q3 2005 (operational EPS of US$0.21) (y/y), and net income of US$82.1 million or US$0.75 per share in Q2 2006. Q3 2006 EPS was significantly higher than our and the Street’s estimates of US$0.68 and US$0.76, respectively. Operational earnings were higher y/y mostly due to the drawdown of inventories; strong methanol demand and tight industry demand/supply conditions arising from planned and significant unplanned outages (i.e. in Trinidad and Equatorial New Guinea), which led to the significant depletion of global inventories and drove spot methanol prices to record highs. The increased Argentina gas export duty is now the major challenge for MX going forward. MX’s gas suppliers are stuck with US$200 million in incremental annual duties, and MX will have to share the pain in order to keep the Argentina gas flowing to its 3.84 million Mg per year Chile plants. We have increased our 2006 EPS estimate to US$3.64 from US$2.72, and our 2007 EPS to US$2.42 from US$2.21. Our target price is increased to Cdn$31 from Cdn$28.30. (National Bank Financial.)

Thursday 26 October 2006 RBC target=$20 Underperform & risky

Friday 13 October 2006 METHANEX(MX)$25.99 – HIKE IN ARGENTINA’S GAS EXPORT DUTY.
RATING: UNDERPERFORM. TARGET: $28.30. RISK RATING: ABOVE AVERAGE. INDUSTRY RATING: UNDERWEIGHT.
MX has advised that Argentina’s Government has extended the existing export duty on petroleum, gas and derivatives to the Province of Tierra del Fuego as of Oct. 20, 2006. MX stated that it is contractually protected against the export. It is not possible, at this time, to gauge the impact on MX’s methanol-production in Chile, but, despite the asserted contractual protection, MX may be exposed after all. If so, it would validate once again our stance that undue reliance on the existence and operation of long-term contracts as a safety/security blanket is dangerous. On the Q2 2006 conference call on July 26, 2006, MX stated that about 32% of its gas purchases would be affected by a duty increase. Now, it is about 60% of its total current gas supply to its 3.84 million Mg (Megagram) Chilean methanol complex. We will be re-estimating our EPS and target price once additional information is supplied to us regarding the potential financial impact of the export duty on MX’s gas contracts.

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