A finite element analysis using zero-thickness interface elements of the Goodman type, which incorporate a fracture mechanics-based mixed-mode constitutive law, is presented to study stress-induced cracking and spalling around a highly stressed tunnel. The effect of bolting on stress-fracturing and rock mass deformations (strains of the rock matrix and opening/sliding of the fractures) is considered by applying bolts at various spacing densities. The adopted tunnel excavation and far-field loading sequence approximates conditions typically experienced at the extraction level of a caving operation. Starting from an in situ stress state, the tunnel is excavated and then loaded vertically to simulate the advancement of the overlying undercut. The tunnel is then unloaded to stress values lower than in-situ once the undercut becomes effective and caving begins. Using a Voronoi tessellation routine, the rock mass near the tunnel cross-section is randomly discretized into triangular elements of similar size to that expected for spalled rock blocks. Interface elements are inserted in between all mesh lines. An interface transitioning to the far-field rock mass separates this finely-discretized zone allowing the rest of the cross-section to be modelled as a linear elastic material for computational efficiency. Rock bolts are simulated in a simplified manner with elasto-plastic rod elements overlapped to the continuum mesh and anchored at several points along their length including the ends. Calculations are run using various bolt spacing densities. The model results show bulking due to stress-fracturing of strong rock. They further show that bulking can only be reduced, but not prevented, through confinement provided by high bolting forces.