Considering how many great Dwarf allies there are, this one (and from one of the early cycles) is surprisingly balanced. 2 for 1 , 0 , 1 , and 2 is exactly what we expect for an ally at that price. The 1 is nice and the and allow the Ered Nimrais Prospector to take a small hit in a pinch (and soak up one archery damage). In any normal deck, this card is incredibly unremarkable.
But of course, this card is meant to be used in Dwarf mining decks (where the Dwarf trait impoves this ally's stat line anyways with Dáin Ironfoot or Hardy Leadership). The mining ability is great in Dwarf mining decks because those decks want to discard the top cards of the deck anyways, perhaps even finding a Hidden Cache or a Ered Luin Miner down in the mine. But the second part of the ability is where this card truly shines. "Then, choose and shuffle 1 card from your discard pile back into your deck". This card fixes the biggest problem with discarding cards from the top of your deck: discarding an essential card such as Will of the West. The beauty of this card is you can wait until the essential card is discarded because you can shuffle ANY card from your discard pile back into your deck, not just the top card like Galadhrim Weaver. This gives you much more comfort in recklessly mining for all the gems in the world.
Of course, this card isn't perfect. You could just as easily have all your copies of Ered Nimrais Prospector discarded into the discard pile, but this card still improves the consistency of mining in the long-run. One nice side benefit of the card is it allows you to shuffle Hidden Cache back into your deck to keep mining for resources.
I recommend you give the prospector a try if you overlooked them (and not just because Dwarves are short), as they might surprise you with their useful stat line and interesting ability.