You can only create enhanced ammo while playing on the hard difficulty setting. When creating ammo with the reloading tool, save enough gunpowder to mix up the same type of ammo eight times. On the eighth time, the game will prompt "Do you want to create the enhanced ammo?". Select "Yes". This ammo is more powerful, may have slightly different effects, and once loaded into a weapon will change it into an "enhanced weapon". You can only create two types of enhanced ammo: 9mm handgun bullets and shot gun shells. The only different effects the new bullets have is that they are far more powerful.