This is one of several tales about how silver was discovered in sandstone. An assayer who was infamous for overstating the value of ore, nicknamed "Metalliferous" Murphy, gave an estimate of 200 ounces per ton. Silver was about $1.30 per ounce in the 1870s, so the value would be about $260/ton (not $100/ton stated in the episode); this is equal to about $5800/ton in 2018. The miners threatened to hang Murphy if he didn't leave town; he left town.
This is the only time silver has been found in sandstone in North America.
The predominate story is that John Kemple initially discovered silver in Leeds, Utah in 1866, and then returned in 1874. Word got out, and miners flocked to the area. The mines in Pioche, Nevada closed in 1875 (one year before this episode is set in that town); most of the mines in Leeds (now named Silver Reef) were closed by 1884 and the town was completely abandoned by 1891.