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I would thing that the safest and most accurate way to do it would be to put a thicker piece of sheet steel over the top of the existing hole, clamp them firmly together and then centre punch where the centre of the hole of the preferred size should be on the top piece and drill the hole the thicker piece on top, and the firm clamping will stop the drillbit "wandering" and the new larger hole will encompass all of the smaller one.Eye hassa 5.5mm diameter hole in somefink which needs the hole opening up so its centre is moved 3mm along. Last time eye tried to drill anuvva hole inner hole eye nearly lost me finger. Tis 1.6mm steel. Gittid 10 holes to do. New holes is 5.5mm diameter anorl. Wot would be yer preferred method?
Piller drill and 5.5mm bit un clamp metal tight. Take it slow and hope a sharp bit bites frew?
Use a side cutting bit?
Alternatively, mig-weld the existing hole shut, dress the metal off, and try again.