The present study was conducted on the machinability of the 396 alloy (containing approximately 11% Si) and the B319.2 alloy mainly to emphasize the effects of Fe-intermetallics, i.e., α-Fe, β-Fe, and sludge. The results demonstrate that the presence of sludge in the form of hard spots has a significant effect on cutting forces and tool life, in that it decreases drill life by 50% compared to the base alloy. The formation of the α-Fe phase in the M1 base alloy has a beneficial effect on tool life in that this alloy produces the highest number of holes drilled compared to alloys containing sludge or β-Fe; this result may be explained by the fact that the formation of the α-Fe intermetallic, with its rounded Chinese script morphology and its presence within α-Al dendrites, is expected to improve matrix homogeneity via hardening of the soft α-Al dendrites. Increasing the Fe-content from 0.5% to 1% in the 396-T6 alloy containing 0.5% Mn produces a distinct improvement in alloy machinability in terms of cutting force and tool life. The addition of Fe and/or Mn appears to have no discernible effect on the build-up edge area (BUE) and chip shape.