This ownership dispute will sour some market participant's sentiment towards AVZ IMO: some investors don't like uncertainty and not being able to access their capital. There are a lot of assumptions (conjecture) in your post...
If AVZ buys an additional 15% they'll still own less than present (assuming present is 75%) if you sell off 24% to CATH. But sure, the $240m will be nice to have in AVZ's pocket to help pay for development.
You can't eliminate sovereign risk - it will be ever present with AVZ in the DRC (perhaps even increasing risk given recent developments). This has never been more visible to the market, and some won't like it that ownership of the asset has been challenged in a country where money makes things happens.
I agree that the bulk of the shorts opened on ASX200 inclusion were insto hedge funds. They don't have to buy back at any particular time after trading commences. Some of them likely also own AVZ shares in other funds.
Some think the SP will rocket on opening, some think it will plunge, others somewhere in between (I think it will be lower than today - no certainty on how much lower). It's ok to have a difference of opinion.
We'll have to wait and see how this plays out, time always tells.
AVZ Price at posting:
78.0¢ Sentiment: None Disclosure: Not Held