On Friday, Augusta Resources (TSX: AZC) announced that it has found nine potential buyers. All of them have signed confidentiality agreements, and will tour the company’s Rosemont copper project in Arizona over the next few weeks.

This is all in response to a hostile takeover attempt by Hudbay Minerals (TSX: HBM)(NYSE: HBM), whose bid is worth close to $2.70 per share. Augusta’s shares currently trade at $3.45, reflecting continued optimism that there will be a higher bid from Hudbay or elsewhere. Augusta’s executives have repeatedly referred to Hudbay’s offer as a “lowball bid”.

So what does this mean?

Of course it is free to sign a confidentiality agreement. It is a lot more expensive to actually make a competing bid for Augusta, especially with copper prices slumping recently. Many CEOs are likely gun-shy after poor acquisitions in the past, and shareholders are not in a forgiving mood. Even if a company decides to launch a competing bid, there’s no guarantee that will secure the asset – it could just start a bidding war.

It is also suspicious that Augusta announced the number of potential suitors so soon. The company is clearly trying to play up the interest in the Rosemont project, but announcing the number of signed agreements accomplishes nothing else. And just like in poker, when a player is acting strong, he is usually holding a weak hand.

Not unlike Goldcorp and Osisko

This situation is very similar to Goldcorp’s bid for Osisko Mining. Both bids are hostile, and both involve the targets having difficulty finding other suitors. But at the same time, both companies trade at a premium to the offer price, reflecting optimism that higher bids are on the way.

But without competing bids from other companies, neither Hudbay nor Goldcorp have much incentive to bid against themselves. And given the state of mining and commodity prices, it will take a serious recovery before we start seeing real bidding wars again.

Foolish bottom line

The good news for Augusta and its shareholders is that it only takes one company to turn the hostile offer into a bidding war. But with the stock trading at such a premium to Hudbay’s bid, investors are playing a very dangerous game by holding on to the shares. At this point, it would be wise for the rest of us to stay on the sidelines and just watch the show from afar.