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Skjalfandi , -LRB- also known as Skjalfandafloi -RRB- , geologically more a bay than a fjord , is located in northern Iceland .. bay. bay. fjord. fjord. Iceland. Iceland. The Icelandic word `` Skjalfandi '' literally translates as `` trembling '' which might refer to earthquakes in the area .. The bay , originally created by glacial activity , has two major streams flowing into it  : Skjalfandafljot , which is a glacier river , and Laxa , which is a freshwater river .. bay. bay. Skjalfandafljot. Skjalfandafljot. glacier river. glacier river. Laxa. Laxa. freshwater river. freshwater river. The river Laxa -LRB- English  : `` Salmon River '' -RRB- is famous for its salmon and part of the river is protected by the Ramsar Convention .. Laxa. Laxa. The only town in Skjalfandi Bay is Husavik , facing the snow-covered Viknafjoll and Kinnarfjoll mountain ranges on the other side of the bay .. bay. bay. Husavik. Husavik. Viknafjoll. Viknafjoll. Kinnarfjoll. Kinnarfjoll. The highest point reaches around 1200 metres .. The bay is known for its many different whale , dolphins and bird species .. bay. bay. whale. whale. dolphins. dolphins. There are two islands in Skjalfandi .. The biggest is Flatey which name means flat island .. It is situated close to the opposite side of the bay from Husavik .. bay. bay. Husavik. Husavik. There is a village on the island , nowadays not any more inhabited , composed of few houses , a school and a church .. There is no ferry serving Flatey .. Skjalfandi 's minor island is called Lundey .. Its name means island of the puffins because of the great colony of puffins living on its cliffs during the summer .. Lundey is located close to Husavik .. Husavik. Husavik. The Swede Garðar Svavarsson was one of the first Scandinavians to settle in Iceland around 860 CE .. Iceland. Iceland. Garðar Svavarsson. Garðar Svavarsson. settle in Iceland. Settlement of Iceland. He built a house in Skjalfandi , but spent only the following winter months there before leaving Iceland .. Iceland. Iceland