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In 1889, the site that will become Perfection Valley is home to the town of Rejection Valley. The inhabitants are completely dependent on the income from a nearby silver mine, and when a hot spring causes Graboid eggs to hatch, the mine becomes too dangerous to work in. The mine's owner is Hiram Gummer, great-grandfather of Burt Gummer. He arrives in town to fix the problem, but finds he is in way over his head dealing with the monsters, which they have dubbed "Dirt Dragons" when they attack his camp one night. One of his companions, Juan, kills one with a pickaxe and they barely get away. Hiram calls for a gunfighter, Black Hand Kelly. He promises Kelly all the silver he can carry once the mine is reopened, but has to give him his diamond cuff links and double eagle watch fob as a down payment for his services. While setting a trap, they find the severed head of a resident who had not been seen in weeks. The two do not get along well, and eventually Kelly is eaten alive but not before discovering there are four of the creatures that hatched, three now since Juan killed one. Hiram decides to abandon the town and leave the townsfolk to their fate, but they force him to give them the silver mine, threatening to alert potential buyers to the danger if he sells it out from under them. In Carson City, Hiram hears a telegram revealing that the Graboids have made it through the pass and are headed for the town. He changes his mind, buys a bunch of weapons, and heads back to town to lead a last stand against the creatures. He apologizes and says, "a friend once told me it is not important how you spend your money, it's how you spend your life." He then reveals that he sold his gold pocket watch to pay for the weapons. The town readies itself for a final showdown with the Graboids. Hiram uses a punt gun to blow a hole in one of the Graboid's heads, killing it instantly, but a second one pulls the gun underground. Tecopa then attracts one of the Graboids by sticking a saw in to the ground and banging on it, when the Graboid rushes to eat him, it impales itself on the saw. The third and final Graboid grows smarter, however, and avoids all their traps. Hiram tricks it into coming to the surface and then attaches it by the tail to the wheel of a traction engine. The Graboid is reeled in and slammed against the wheel with such force that its head is crushed on impact. With the creatures dead, the town decides to keep the creatures secret out of fear no one would settle in the area if it was known and use the proceeds from the mine to pay for things for the people of the town. Hiram settles in Rejection (renamed Perfection at the close of the movie), building his home in the same place Burt's would one day be.
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