In Sonar here but I'd suspect the same basics apply.
Make back ups of everything.
Reopen and 'Save As the proj to this new project's name.
On this new proj, highlight and strip everything but this song. If the song is one out of a continuous recording, drop in head and tail markers and make 'splits so you can isolate this section you want to keep, and strip'.
'Save and now this is your new one song proj.
Both projects [might? Again I'm not in Cubase here] still use the original big multi song data folder/path.
In Sonar they have a 'Consolidate Audio that saves and makes a new folder with just the new proj data.