The damaged hole needs to be welded up first since it has taken out so much material. Remember that slot is on both sides.
When drilling the new hole, see if you can put a hardened bushing in the axle, or at least use a bigger bolt. The axle material is too soft and malleable, and the fit too loose, so the relatively hard bolt "wallers out" (that's a technical term :-) ) the hole. A tighter fit may also help.
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