Given that it's been about 6 months since I was there, I thought I'd better check with the card fraud people about this - but after some debate, they decided it was a real payment that had somehow 'got stuck'.
On the plus side, I'm pretty sure the only thing I bought in Sandigerdi was a decent sized meal for 2 people (in an Icelandic Wooden Cafe), so I feel I've done well getting it for £4.33 with 6 months free credit!