THURSDAY SEPTEMBER 28, 2006 12:55PM EST

By Sandra Marquez

On his last day before he disappeared at sea, Patrick McDermott was gardening in the backyard of the Malibu home he shared with his love of eight years, Olivia Newton-John.

Now, more than a year after he vanished – leaving his driver's license, wallet and car keys aboard the Freedom, an overnight charter fishing boat that departed Los Angeles on June 30, 2005 – a stone labyrinth stands in his place. Newton-John built the winding path as a private memorial where she can go to feel close to the man she says was "the most romantic person I've ever known."

"He loved this garden and there are a lot of things here that remind me of him," says Newton-John, 58, in an exclusive interview with PEOPLE. "So he is here."

It's a reflection of Newton-John's enduring positive spirit that despite the pain of the past 15 months she has emerged more hopeful and loving. This month she releases a new CD, Grace and Gratitude, which was inspired by her loss of McDermott, a cameraman she met on a commercial shoot.

McDermott won her heart on a special Valentine's day when he planned a "magical mystery tour" for the Australian singer. Leaving cards hidden as clues around Malibu, McDermott guided the Grease star to the beach where he waited for her in a tent with a bottle of champagne. "That's typical of the man he was," she says.

The songs on Grace and Gratitude, which use Eastern influences such as sacred Tibetan and Japanese chants, are unlike anything Newton-John has performed before. "It's been a difficult year and this music I've been creating has really been part of my healing," she says. "The whole CD is a spiritual type of journey."

The journey began in July 2005 when McDermott's ex-wife, Yvette Nipar, called Newton-John to tell her McDermott had gone missing. "I've been through cancer and divorce. Nothing compares to this," she says.

Long daily walks with her faithful companion, Jack, a 9-year-old Irish setter, allowed her to survive the pain, though she realized she could not get through it alone.

"I took antidepressants for six months. I had to," she says. But she is quick to add that the healing only really began when she stopped taking the medication. "Once you go off them you can deal with it better," she says. "It's important to go deeply into your emotions. You have to cry."