Hi Stuartew,
I know Cryengine 2 and 3 used to have a Voxel Editor feature where you could model caves in real time easily, but due to some bug problems it was patched out. The best possible way to create caves are through third party model programs like Blender or 3dsmax,maya, ZBrush etc. You will have to model lots of rocks or try make a shape of a tunnel and just place the meshes in the engine together so that the meshes form a tunnel. I hope this helps. 