I have drilled out a lot of lug holes to 1.3mm for different projects and always use HSS 'cobalt' drill bits.
Why?
Here is some info:
https://bestdrillbit.com/cobalt-vs-hss-drill-bit-comparison/
Btw, many drill the holes out to 1.25mm but I go with 1.3mm because it makes it easier to install bracelets/straps as the spring bar tips have a slightly bigger target. It is not much but it makes it little bit easier.
I have also drilled quite a few holes in the sides of clasp caps and use a .9 or 1.0 cobalt drill bit. If a six hole DJ cap has enough room for a seventh hole (like most genuine caps), I usually drill one. I use an old clasp cap (clamped to the new one) for a guide and drill through the existing holes into the new cap so the bit will not walk away. I clamp the two clasp caps together using vise grips with the jaws padded with plastic electrical tape.
The drill bit needs to be long enough to go through both holes on the guide clasp (16mm+/- on a DJ) and through one side of the new clasp. A .9mm or 1.0mm drill bit long enough to pass through both clasp caps and drill two new holes in one shot would have to be about 40 or 45mm long. The last bits I got were 38mm long, they might work but there would not be much of the bit in the chuck or collet.