Correct, Pension Fund A's custodian lends to Bank B, which lends...

Correct, Pension Fund A's custodian lends to Bank B, which lends to Bank C, whose hedge fund client goes out and sells short. Gross short is 2 shares. Net short is 1 share. Only one share needs to be covered by buying in the market for this example. The ASX publishes a daily securities lent and a securities borrowed report, which splits the quantities into the net and gross amounts. As you would expect, gross and net are highly correlated, though not perfectly. You can expect that a lot of shares would need to be covered for GXY.

It is worth noting that only the registered holder can vote, so Pension Fund A has to recall the loan if it wants to vote. This can create a tight borrow market and induce a short squeeze up to the record date for the AGM.