The
parts to the right of T1 form a simple
Joule-thief ('Blocking' oscillator) circuit
which boosts the 1.2v supply to 3.5v to operate
the LED. C1 is used to extend the charge and
discharge cycles to increase brightness and
efficiency. Components R, C and D1 form a
simple timing circuit which, with the values
shown, is about 1 sec per flash. Capacitor C
charges up through resistor R until its voltage
is enough to bias D1 and turn Q1 on to light up
the LED. The charge on C is slowly drained,
until it is no longer able to keep Q1 on, at
which point the LED turns off until C can be
recharged by R again. More information on this
circuit and others can be found at
http://quantsuff.com.