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When I was in the Arctic in 2003, I searched in vain for a sundial which showed midnight. Here's one. There are just three problems:
1. There's no gnomen. It seems that you just have to look towards where the sun is. Perhaps if the sun was visible now, some clever technique involving the curved mirror would become apparent.
2. This is 144 km South of the Arctic Circle so on flat ground, you wouldn't get midnight Sun at this latitude.
3. Seyðisfjörður is surrounded by mountains so unless the sun is high in the sky, you won't see it from here at all.
UTC Time: 09:29, Tuesday 28 August 2012
Local Time: 09:29, Tuesday 28 August 2012
Estimate of longitude: 14° 0' 27.83" W = -14.007730°
Estimate of latitude: 65° 15' 36.07" N = 65.260020°
Possible error on position estimate: 100 metres