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Hmmm, that's not the first 96 Explosif to break at that point I believe. Strange that the dropout itself has failed, not the chainstay, would have thought a piece of solid steel would be stronger than a tube. Repairable though.
The 97 Explosif and Kilauea had a new style of dropout, so maybe Kona found there was a warranty problem with those. Though my 96 looks ok at present, he said with fingers crossed and touching wood.