[vivit]

First off its not the Dark crystal movie. It's about a "goblin" type creature that tunnels to the surface in order recharge his cystal in order to save his city from darkness. His "job" was a tunneler using stones tied to his hands,which he did very quickly. He meets a boy by accidentally tunneling into his house who ends up helping him recharge his crystal. I remember the creature looking very raggedy and not scary looking. He kind of looked like one of the podling creatures from the dark crystal movie. The movie was made with real people with the creature being a puppet(I think). I've looked at hundreds of "top 100 80's movies" and haven't seen it so it makes me think it was considered a B rated film.

[straydog]

Sounds like

Upworld (90)
a.k.a. A Gnome Named Gnorm

-view trailer-
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[vivit]

Sounds like

Upworld (90)
a.k.a. A Gnome Named Gnorm

-view trailer-
----

You're my hero straydog. You are most definitely right!