You should be able to do it with ConvertExtension, converting from Mercurial to Mercurial.
From docs:
The filemap is a file that allows filtering and remapping of files and
directories. Each line can contain one of the following directives:
include path/to/file-or-dir
exclude path/to/file-or-dir
rename path/to/source path/to/destination
I've had success with the following command line
hg convert ./OriginalRepo ./NewRepo --filemap fm.txt
where fm-txt would look like
include SubProjectFolderName
You might want to look into renaming that folder to not be a sub-folder in the new repo. Haven't tried that myself though.