Short sellers borrow the stock from an owner, deliver it to the...

Short sellers borrow the stock from an owner, deliver it to the ASX via their broker to meet the standard T plus 3 days settlement and receive the cash proceeds. They then pass these proceeds onto the lender as security for the stock they have borrowed.

There is a margining process whereby as the stock price goes up or down, the borrower has to adjust the collateral they have pledged.

As the FGE stock will most likely go to zero, the borrower (the short seller), gets their collateral back, which is effectively their profit. Given Forge is in a trading halt, this will take some time, but a nice problem to have.