Restricting access to subfolder with .htaccess

[SimonMac]

My .htaccess is as follows:

AuthType Basic
order deny,allow
deny from all

AuthName "Password Protected Area"
AuthUserFile /var/sites/d/example/public_html/.htpasswd
Require valid-user

# Allow from EXAMPLE
Allow from xxx.xxx.xxx.xxx
Satisfy Any

If I stick this in the public_html folder anyone from the IP address is allowed access, other people have to enter the password defined in the .htpasswd

This works perfectly if I want to restrict access to the whole site, how would I change this so that access to just a specific subfolder, but the rest is open to all? Can I just put the .htaccess and .htpasswd in the subfolder or is it not that simple (obviously changing the path to the AuthUserFile)