L1 is a coil (also called an inductor) wired in parallel to capacitor C1; the combination of this dynamic duo is a parallel LC (inductor/capacitor) circuit. When a signal that oscillates at several kHz passes through this circuit, the signal creates an electric field around the coil. When you bring the coil near a metallic object, that electric field induces an oscillating signal in the object. Turnabout is fair play, so when the oscillating signal has been induced in the metallic object, the signal in the object creates an electric field that induces current in the coil. This current changes the oscillating signal running through the LC parallel circuit.

IC1 is a TDA0161 proximity detector. This IC is designed to supply the oscillating signal that’s sent through the LC parallel circuit. The IC also responds to any changes in the signal: the IC has an output of 1 milliamp (mA) or less if the coil is far from a metallic object and an output of 10 mA or higher if the coil is near a metallic object.

R1 is a resistor, and R2 is a variable resistor. These resistors are used to calibrate the circuit in IC1 to the LC circuit. You calibrate the circuit by adjusting the value of the variable resistor when the coil is not near any metal objects.

R5 is a resistor connected between the output of IC1 and ground. When the output of IC1 is on, current flows through this resistor and provides a positive voltage to the base of Q1.

Q1 is a 2N3904 transistor that you connect to the output of IC1. When the output of IC1 is high, Q1 turns on and allows current to flow through LED1.

LED1 is the indicator light used to indicate that the device has detected metal in the vicinity.

R3 is a resistor that limits the amount of current flowing through LED1, which prevents it from burning out.

S1 is the on/off switch.