Weren’t there some picture of dredging machines that were sifting gold? I would have thought they would try to sift for gold first and then build the dam fill.
There are many historic postcard pictures of the large floating gold dredge machines at Oroville. The last phase of the gold rush was going after the fine gold in the lower Feather River area using dredges. After all of the river basin area was mined, the leftover material, of 30 to 50 ft high of aggregate rock piles, covered nearly every inch of the basin.
You can see the rock pile tailings in the first photograph (look in the distance between the conveyor & bucket machine. So the gold was long removed many decades ago. The first proposed version of the Oroville dam was an interesting "arch column" tiered massive concrete structure. When costing out the concrete design against an earthen fill design the earthen fill materials were equal to the most competitive concrete design. Since the gold dredge tailings were not far away & ready made for all of the pervious and non-pervious material requirements for a massive earthen fill dam, they chose the latter.